As real estate acquisition becomes more challenging and rents increase, a recent survey conducted by Pricewaterhouse Coopers (PwC) and the Urban Land Institute has named Calgary and Edmonton, respectively, among the top locations for real estate investment. The survey places Edmonton and Calgary above Toronto and Vancouver, which previously held the top spots.
In fact, in North America in general, Canada may be the stand out winner in this regard. PwC Canada’s real estate leader, Lori-Ann Beausoleil, said, “The Canadian real estate community understands real estate fundamentals and knows how to react to fluctuations in monetary policy and capital markets. Canada’s real estate industry continues to operate well despite uncertainties in domestic and global economies.”
The survey done by PwC and the Urban Land Institute included Canada, the United States, and Latin America. With more than 900 people offering their perspectives for the report, it is clear that throughout the surveyed area the real estate market is seeing similar challenges and opportunities. However, the report concluded that, “compared to everyone else Canada will do very well.”
The report suggests that apartment buildings, office space, and industrial space will receive particular attention from investors across Edmonton and Calgary. And the retail market of the two cities will gain the attention of developers.
Edmonton and Calgary are doing particularly well compared to other locations because of their strong resource base. The chairman of the commercial real estate company CBRE Canada, John O'Bryan recently talked about the survey at a conference saying, “Anywhere that has any resource base is doing exceptionally well.”
Mr. O'Bryan spoke further about Real Estate Investment Trusts (REITs) saying, “It’s almost the perfect environment for them. Take office buildings, two thirds of all of the transactions have been REITs.” He used the purchase of Toronto's Scotia Plaza for $1.266 billion by Dundee REIT and partner H&R REIT to highlight his point. He added, “They’ve got the balanced sheets, they’re proven in the capital markets.”
The report also released the suggestions and proposals of the more than 900 individuals that participated. Among them were:
- While energy and commodity markets remain strong and/or stable and as workers continue to increase in the area it is suggested that investors land bank out west.
- It is suggested that, in major markets and across property classes, core real estate and strong income producing properties should be held.
- An under served market in the area are large layout constructions. More buyers are looking for large layouts as condo prices rise.
- Because urbanization will continue to grow, which will increase the value of of downtown sites and upscale locations, it is suggested that if luxury condo prices decrease, then investors should buy.
- Infills offer many opportunities for investors. Focus on infills that are close to amenities, hot spots, and mass transit.
- More and more major tenants are seeing the advantages of green offices and willing to relocate if the opportunity is there.
And while real estate investment is becoming more challenging, Edmonton and Calgary are stand outs in the market.
Chairman John O'Bryan summed it up best by saying, “Conditions can’t be any better.”