GTA investment sales activity continues decelerating – Altus Group

Sales activity in the Greater Toronto Area investment market considerably slowed down in Q1 2019, according to a new quarterly analysis by Altus Group.

A total of 502 investment property sales valued at over $1 million transpired in the GTA during the quarter, and overall investment stood at $4.1 billion. This made Q1 2019 the fifth consecutive quarter of decline in investments, with the total volume fully 29% lower than the level seen in Q1 2018. The deal count was also the lowest measured since Q1 2015.

However, Altus assured that the trend was impelled more by product shortages than by lack of demand, “as investor sentiment remains confident.”

“Quality asset supply issues continue, translating to a decline in overall investment activity. Demand for these assets has driven Toronto to a year-over-year decline in overall cap rates at 4.25% to 4.15% in Q1 2019,” the analysis noted.

The GTA’s land market led the charge, representing 32% ($1.3 billion) of total sales for that quarter. The sale of the Celestica Campus in North York (valued at nearly $348 million) was the largest residential land transaction for Q1 2019.

The industrial sector was the region’s most traded asset during Q1 2019, but the volume was not enough to prevent losses as the total transaction value went down by 9% quarter-over-quarter and 3% year-over-year.

Retail was the second most active segment, but total value also fell by 34% from the previous quarter.

Meanwhile, the office sector saw the GTA’s largest sale across every asset class for the quarter, which was the $473-million transaction involving the 650,000-square-foot Dynamic Funds Tower. However, although the segment enjoyed 8% gains from the previous quarter, it also experienced a 55% annual decline.

The apartment sector suffered significant losses, with declines of 61% quarter-over-quarter and 19% year-over-year.

“This can be attributed to investors seeking opportunities in secondary and tertiary markets due to the competitive market combined with a lack of supply, as well as the lack of multi-family portfolios closing,” Altus explained.

 

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