The outlook for the Canadian real estate market varies throughout the country. While real estate in Alberta remains depressed, cities such as Toronto remain strong.
- Edmonton is beginning to see a division emerging amongst its inventory, especially in the downtown office market.
- Edmonton’s economy continues to reposition following the oil price decline.
- The overall sentiment of investors toward Calgary real estate has remained very cautious in the first quarter of 2016.
- There have been virtually no material office transactions in Calgary over the past year, as buyer and seller expectations are not aligned.
- Foreign investment has started to emerge in Toronto due the weakening Canadian dollar.
- There is a downward pressure on capitalization rates for quality, investment-grade product even through economic softness in Toronto.
- All real estate assets in Montreal, including office, retail, industrial, multi-residential and hotel have remained stable since Q4 2015.
- Winnipeg will see downward pressure from a lack of supply of high-quality real estate assets, and a low interest rate environment will push capitalization rates lower as we move through 2016.
- The investment market is high given the influx of demand and, consequently, increasing prices for many assets. Vancouver will see low capitalization rates for well-located or quality product throughout Q1 2016.
- However, the real estate market continues to thrive as large amounts of Chinese corporate dollars are flooding the marketplace.
- The Ottawa commercial real estate market has continued to set trends over the last 16 months with ongoing low transaction activity.
- However, as we move through 2016, we anticipate transaction activity to pick up.
- Despite capital market pressures, commercial real estate markets have remained stable with continued strong demand for quality assets, and little downward pressure on capitalization rates.
> Download the Canada Cap Rate Report Q1 2016