How Canada Became A Leader In Global Commercial Real Estate
The Canadian global commercial real estate market is thriving. Yes, it’s true, Canada is now a leader in global commercial real estate making us the Switzerland of North America. According to CBRE Group Inc., a juggernaut in commercial realty, Canada’s stability is what made it all happen.
Commercial real estate up 15% since 2016
Commercial real estate transactions in the country topped around $40 billion in 2017. That’s a 15% jump from 2016’s record year of $34.7 billion. Moreover, CBRE claims that investments from January to September 2017 alone totalled $33.1 billion, pretty much matching the entire amount of 2016. Why? Because people want to invest in a country that isn’t rocked by constant financial instability. Instead of being pursued by only the upper class and wealthy companies, commercial real estate in Canada appeals to most foreign investors due to the fact that the returns are pretty great. The deals in Canada are growing bigger and bigger with the demand for deals getting steadier and steadier.
Toronto and Vancouver play a role
In Canada’s most populous cities, especially, Toronto and Vancouver, we’re seeing a constant demand for commercial real estate assets. This not only raises the prices of commercial properties, but helps spark interest from global investors. In addition, the vacancy rates in our country’s most populous cities are so low compared to the rest of North America, that foreign investors are clamouring to snatch up our office buildings and storage facilities. Countries like Germany, the Netherlands and the United Kingdom are all taking notice of our commercial real estate offerings and pouncing on the opportunities available for investment.
If the prices are so high, why are foreign investors buying?
The Canadian commercial real estate market is seeing investors aggressively bid on our properties even though the prices are climbing. When more people have confidence in the stability of our financial market, it makes them want to purchase commercial real estate assets which in turn leads to price increases. It’s a cycle. Foreign investors see that our market is stable so they buy. When they buy, the prices go up. Other foreign investors see that their competitors have bought commercial real estate in Canada so they buy too and the cycle continues.
Finally, our Canadian dollar helps to lure in investors. Although, it would be nice if our dollar was on par with the British pound, Euro, Yen or American dollar, a soft dollar does make it easier to become a leader in global commercial real estate.