2014 Global Investor Sentiment Survey

Retail and Off-Shore Top Canada’s Real Estate Investors’ Wish List

  • Nearly three quarters of investors are planning to expand their portfolio in 2014 with domestic and U.S.- focused outlook
  • Investment activity in the Canadian retail sector almost doubled compared to that of the previous year
  • Canadian investors have relatively low appetite for risk in 2014
2014 Global Investor Sentiment Survey screenshotToronto, November 21, 2013

Weathering the global recession better than other developed economies and backed by solid capital market conditions, Canada’s commercial real estate investors intend to continue to punch above their weight in offshore investing according to the 2014 Colliers International Investor Sentiment Survey released today. The survey of more than 500 major institutional, REIT and private investors including most of the largest players from Canada revealed that Canadian investors are looking beyond the domestic market to generate higher investment returns and diversify risk. According to transaction data from Real Capital Analytics, Canadians are the largest foreign buyers of commercial property in the U.S. with closed and under-contract transaction volumes reaching $US8 billion. Investor activity in other foreign markets places Canada as the third largest global investor with $US14.2 billion, behind only the U.S. ($US37.5) and Singapore ($US14.4 billion).

Somewhat surprisingly, the large volume of Canadian offshore investments, specifically in the U.S., is driven by only 19 per cent of Canadian respondents, who identified the U.S. as their primary target, with the lion’s share (73 per cent) still considering Canada as the primary investment destination in 2013 and well into 2014 (81 per cent). It would appear that even those who view Canada as top priority are still open to U.S. investments. Toronto emerges as the most sought after city for commercial investment by 38 per cent of respondents, followed by New York and Vancouver (12 per cent each), Calgary, Munich and London, UK (6 per cent each).

“Although the number of investors who indicated that they tend to invest offshore appears small, the impressive outflow of capital from Canada towards offshore investments, mainly south of the borders, indicates these investments are carried out by the largest players in the market,” says David Bowden, President and CEO, Colliers International Canada. “Furthermore, less than half of Canadian investors claimed to have appetite to take greater risk in 2014, which is below the levels their peers in the U.S., the UK and Australia expressed. Given that Canada and the U.S. are considered a safe haven, it is natural that local investors gravitate towards these markets.”  

Ian MacCulloch, Director, Market Intelligence for Colliers International in Canada, adds, “The main driver for this massive investment in the retail sector stems from portfolio and entity level transactions related to the acquisition of Primaris assets by H&R REIT, KingSett Capital, RioCan and the Ontario Pension Board. This, coupled with Canadian retailers such as Sobey’s, Loblaws and Canadian Tire capitalizing their real estate assets, is a clear indication of the increased interest from investors to venture into this category.”The focus of Canadian investors on domestic opportunities has also had a dramatic impact on investments by asset type this year. With news and hype around the retail invasion into Canada, investment activity in this sector has almost doubled (95 per cent increase) compared to that of the previous year. Shopping centres as primary target investments were cited by two-thirds of respondents, followed by complementary industry sectors such as industrial and logistics (49 per cent). The CBD office market slipped to third place in terms of investment attractiveness, cited by 43 per cent of investors as a target market.

Additional Key Findings

  • 73 per cent of Canadian investors are planning to expand their portfolio over the next 12 months.
  • 89 per cent of Canadian investors surveyed agree that good investment opportunities are scarce and 92 per cent of respondents claim that there is fierce competition for investment in markets considered stable due to global economic volatility.

About the Global Investor Sentiment Survey

The Colliers International Global Investor Sentiment Survey was conducted during the month of September 2013 and includes responses from 522 major institutional and private investors. Survey participants represent a broad cross-section of property investors across the globe, including 38 of Canada’s largest private and institutional property investors. The survey measured investors’ sentiment and outlook for the next 12 months on topics such as investment activity, market conditions and risk, access to debt, financing and asset valuation.

> Download full report.

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