he First Quarter 2013 Canadian Real Estate Sentiment Survey, released today, reveals confidence is up among commercial real estate lenders from Q4 2012. The survey is conducted quarterly comparing the opinions of the top commercial real estate executives across the country. Bosses are asked about the current and future outlook on market conditions, lending conditions and asset values.
The survey indicates that the current state of the economic climate has contributed to the buoyed activity in the commercial real estate sector.
"The market is fuelled by a lack of reasonable investment alternatives,” reads the report. “No other option can offer the yields and relative safety of real estate. As long as investors have nowhere else to go and real estate supply and demand fundamentals continue to remain strong, this rally still has legs. That said, any shift in fundamentals or change in credit conditions will cause an immediate adjustment and stall the cycle."
Still, it’s REITs that are described as “dominating the buyer profile” in Canada.
Some highlights from the report:
• The Q1 Index ticked up just slightly as real estate fundamentals are seen as very strong, although the threat of external crises remains
• Many participants are pleased with the current state of the real estate industry, though optimism is tempered by lingering uncertainties
• Asset prices continue to see considerable gains; some worry about future interest rate change while others do not expect a reversal of this trend in the near to mid-term
• Debt is widely available despite heightened underwriting requirements; lenders continue to be eager to put capital to work
• Equity capital is abundant as investors continue to search for yield, though many cited deployment of capital as a challenge
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