The drop in the value of the Canadian dollar has not curbed the appetite of Canadian commercial investors for property south of the border. According to a survey cited by the Financial Post, early results indicate that US$ 2.75 billion has already been invested in the States during the first two weeks of January.
The enthusiastic start this year comes on the heels of a busy 2014, which saw Canadian investors dominating the US investment market, doubling the investment of their closest foreign rival, Norway.
Canadian pension funds purchased US$ 9.7 billion in US real estate, making up 26 per cent of all real estate bought by foreign investors in 2014.
But the Canadian investment only makes up a fraction of the entire investment in the US market. It was worth US$ 434 billion in 2014.
When asked whether the falling Canadian dollar could have an impact on future investments, Jeanette Rice, the Americas Head of Investment Research at CBRE, said that while it could “mitigate investment,” there are some positive conditions in the market to balance each other out.
She went on to add that since September 2012, the dollar has gained 20 per cent, which is a significant amount.
Since Canadian pension funds are faced with a limited ability to grow domestically, they are forced to invest abroad.
The US market is a logical choice due to proximity and similar customs. Investing in a foreign market like China, for example, takes a lot more preparation.
It is much easier to make arrangements to visit a US commercial property, talk to professionals and get transactions completed when dealing with a neighbouring country.
