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Scarcity of commercial assets drove lower foreign investment

A group of skyscrapers under construction in a city.

A noticeable lack of significant portfolios for sale, as well as a dearth of top-tier office complexes and rental apartments, has led to a marked decline in foreign commercial property investment so far this year.

Data from Altus Group Ltd. showed that the total volume of January-June commercial transactions across Canada plummeted by 70%, from the $5 billion during the same period in 2018 to just $1.5 billion this year.

Moreover, while price growth and levels have intensified as a result of this scarcity, many investors have instead chosen to wait and see on the sidelines, Altus vice president of data operations Raymond Wong told BNN Bloomberg.

The latest Emerging Trends in Real Estate study published by PwC Canada and the Urban Land Institute found that development timelines – in commercial and residential alike – are among the sector’s most pressing concerns.

Industry players cited approval processes along with construction, material, and land costs as the top issues in 2020.

Fortunately, the next few months will likely see some pending major deals close, Altus stated. Among this are Oxford Properties Group’s sale of the Fairmont hotels portfolio to a Singaporean wealth fund, as well as the investment in a $2.4-billion Canadian senior-housing portfolio by Chicago-based Ventas Inc.

Also expected to continue is the trend of intensified demand for Canada’s commercial space, which in recent years has been impelled by the flourishing tech and e-commerce sectors.

About the Author

Ephraim is currently a journalist at Mortgage Broker News, Real Estate Professional and Canadian Real Estate Wealth. Ephraim is a highly accomplished news reporter whose work has been published across North America and the Asia Pacific region. Before joining Key Media, Ephraim spent eight years working as a journalist with Reuters TV. His areas of expertise include real estate, mortgage, and finance. LinkedIn | Email  

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