By global standards, the Canadian property investment market is small, mature and dominated by relatively few players particularly institutional investors such as pensions funds. Canada’s real estate hasn’t experienced the same decline in property values and stress from the recent economic turmoil that is evident in the U.S. generating ‘fire sale’ conditions there and in some other countries.
Do these characteristics and circumstances make Canada an attractive location for global investors, or not? There is a different answer to this question depending on whom you ask.
Andrea Stephen who is the Executive Vice President of Investments with The Cadillac Fairview Corporation Limited told RENX that “Absolutely there is interest from Global investors in Canadian real estate.”
Cadillac Fairview is one of North America’s largest investors, owners and managers of commercial real estate with a portfolio valued at more than $17 billion and nearly 50 million square feet of leasable space. It is wholly owned by the Ontario Teachers’ Pension Plan.
“Interest in Canadian property has increased with the recent financial crisis,” said Stephen a phenomena that she attributes to Canada’s strong banking system. In the past year, Cadillac Fairview has received a higher volume of inquiries from Asian, European and Middle Eastern sources than ever before.
By applying Cadillac Fairview’s relationship focused approach to investors Stephen anticipates that these new alliances could lead to domestic and foreign investments depending on where opportunities emerge.
Cadillac Fairview owns property in the UK that includes an interest in Canary Wharf, Thomas More Square and Hammerson, a leading European REIT. The UK market has been under severe stress but is considered to be near, if not at the bottom of the economic cycle. Like the US where Cadillac Fairview owns a retail and office portfolio, Stephen said it is difficult to predict the rate of recovery for their real estate markets.
Taking a big picture view of investment opportunity, Stephen said the maturity of markets in North America and Europe limits their growth potential and therefore requires a shift to real estate located in areas experiencing significant population increases.
In the emerging markets Cadillac Fairview has made an ongoing commitment to investing in Brazil. In 2006, it became a significant shareholder in Multiplan, which owns one of the best shopping center portfolios in the country as well as office and residential properties.
“Global investors are feeling more comfortable about making investment decisions now than they were at this time a year ago” said Stephen. “People are still cautious but more optimistic.”
Pip White, Managing Director, Capital Service for MGPA in Canada has a completely different perspective from Stephen on the Canadian property market. “Canada doesn’t typically come up in discussions with global investors” he said in a telephone interview with RENX. A large amount of existing investment quality Canadian property is closely held by institutions which is one of the factors that he said makes it less appealing than other places.
MGPA is an independently managed private equity real estate investment advisory company owned by its investment team. It manages US$11-billion in assets and has experienced professionals stationed throughout Asia and Europe.
A preferred market of MGPA’s is Japan where its assets include office, retail and residential properties. The Japanese market has been hit quite hard as a result of the global economic slump and Mr. White indicated that it is a likely destination for MGPA funds in 2010.
Commenting on the US real estate market, White said it has not seen as much distress as one would have expected at this stage in the economic cycle. With US$1.4 trillion of commercial debt coming due over the next three years and as much as a 50% equity gap he says the major financial stress in the US commercial real estate market is still ahead.
Given the current investment environment what is an advisable global property investment strategy for 2010? Find out at the 4th annual Global Property Market to be held in Toronto on December 1st. Read the conference brochure to learn about its outstanding list of speakers which includes Andrea Stephen and Pip White.
Registration cost for the Global Property Market is only $395.00 plus tax until November 24th including the Chairmen’s reception for the Toronto Real Estate Forum.
Registrants to both the Global Property Market and Toronto Real Estate Forum receive a $50 discount for a combined registration fee of $990.00 + tax.