Commercial real estate remains awash in Toronto. It continues to allure an assorted group of keen buyers deploying an ample supply of capital across classes of asset and geographical boundaries. Despite of current interest-rate hike and various global political, economical and property market conditions, commercial properties have been a better place to invest. In other words, real estate has been recognized as a real alternative asset class to stocks and bonds in Toronto.
Investment in commercial properties in Canada has been buoyed by relatively healthy economy that has always been the envy of G7 countries. With record amounts of capital still looking for a home, investors keep on finding ways to buy Canada’s finite investable commercial properties. Reports reveal that investment sales in Canada have increased remarkably with higher dollar volumes in the first half of 2017 compared to that of previous year. While majority of the capital was driven towards the office sector, it was the retail sector that registered the highest increase. However, capital from domestic and foreign investors was mainly directed towards Toronto and Vancouver.
Toronto Investment Market
Following a record $28.4 billion in commercial real estate investment sales in 2016, Canada’s six major markets had first-half 2017 sales of almost $19 billion. Supported by notable $200-million-plus transactions, office had been the top investment sector with $5.3 billion in sales with an annual increase of 16%. It captured 28% of total dollar volume. Toronto and Vancouver made up almost three-quarters of Canada’s office sector as investors poured nearly $2 billion into each market, mirroring the results registered one year earlier.
As we move through 2017 and into 2018, the commercial real estate investment market will continue to be marked by stimulated buyers and sellers functional in relatively stable property markets and in a still-favourable debt environment. In spite of elevated valuations, in the longer term, interest rates are expected to rise with an eye on normalizing asset pricing.