Domestic investors beat out by foreigners?

Real estate services giant CBRE has warned that commercial real estate investments moving through Canada’s markets would drop to $23.6 billion next year, down from $26.1 billion in 2014 and $24.4 billion (forecast) in 2015. The projection marks the 4th straight year of decline in the sector.

The CBRE report also estimated 2016 national vacancy rates to rise to 11.1 per cent, up from 8.5 per cent in 2014 and 10.1 per cent this year. In particular, the Calgary office market is expected to suffer from a central core vacancy rate of 18.4 per cent next year.

These developments come in the wake of the increasing presence and influence of Chinese investors in the market, which analysts said was a part of a crystallizing global trend of Oriental investment.

“We saw it in New York, we saw it in London. What was interesting to me is Chinese capital is highly selective. It’s only going to maybe four or five countries. You look at the ties between the countries, you’ve got a large Chinese population in Vancouver and Toronto, so they go with what they know,” CBRE Canada director of research Ross Moore told Financial Post.

The CBRE isn’t all doom and gloom, though: REITs in the publicly traded real estate investment sector are now trading at around 8.5 per cent, way below their net asset value. Also, majority of Calgary apartments remain relatively occupied, and multi-family residential investments remain a hot option.

CREW

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