Canada’s real estate industry is in good health, according to figures released by BMO Economics. Interest rates are expected to remain low over the medium term, which will make the prospect of purchasing income-producing properties very appealing to investors.
The report indicates that real estate management and development have played a leading role in the Canadian economy. The industry has been instrumental in driving small business success as well. This sector, which is defined as firms with less than 100 employees, was responsible for employing 5.2 million people in 2011. A total of 775,000 earn a living from the construction or real estate industries.
The commercial real estate market underwent a severe downturn in the 1990s, but has rebounded well. Limited supply is one factor contributing to the current favorable conditions for investors, and vacancy rates are lower than average in several cities. Investors in the Canadian market have tended to be rather adverse to assuming a high level of risk, which has served them well to date.
Corporations have performed well recently, which has served to maintain the quality of real estate loans at a high level. Low mortgage rates have supported real estate investment throughout the country.
The BMO Economics commercial outlook report indicated that Toronto, as the country’s largest commercial real estate market, underwent a significant recovery in 2011. The market continued to perform well in the first six months of 2012.
In Montreal, office vacancy rates fell from 11 per cent in 2010 to 8 per cent at the end of 2011. In the first quarter of 2012, they were on the rise due to higher unemployment in the professional services and business categories. A recovery in that industry is taking place, and the financial services industry is growing, which means that the market has tightened for the second quarter.
Prices are higher in Vancouver due to an ongoing issue with lack of supply for all commercial property classes. Investors are being driven into the market by disappointing bond yields and stock market volatility.
Calgary is another hot spot on the Canadian commercial real estate scene. The city has recovered remarkably since the recession, and with its strong employment numbers, retail sales, and investment in industry (both resource-based and supporting ones), it has a lot going for it.
Previous Post
US Commercial Property Market Outlook Optimistic
