Toronto and U.S. best bets for property investors: PwC

Tue Nov 2, 2010 2:05pm EDT
 
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TORONTO (Reuters) - Best bets for Canada's commercial real estate investors lie in apartments and opportunistic assets in a U.S. market recovery, while Toronto bumps Vancouver from the top-ranking city to invest and develop in next year, an influential survey said on Tuesday.

In 2011, Canadian real estate investors should expect "slowing, steady growth and decent prospects" as long as the U.S. economy does not weigh, according to the Emerging Trends in Real Estate 2011 report, released by PricewaterhouseCoopers and the Urban Land Institute.

The survey reflects responses from more than 875 of the real estate sector's players, including investors, brokers, lenders and developers, in Canada and the United States.

With very few signs of distressed sales in Canada compared with the United States, property owners, armed with solid access to financings, have turned south of the border to look for acquisitions.

In Canada, a "hold-on mentality" has emerged for institutions such as pension funds and insurers, which dominate ownership in major cities, because of the steady income these assets offer.

"Not only has the Canadian real estate industry been able to weather the downturn in the economy better than other markets, the environment in the U.S. has allowed Canadian investors to be opportunistic," says Lori-Ann Beausoleil, national leader of the Real Estate practice for PwC Canada.

"Canadian investors looking to expand into the U.S. market or who are already in the U.S. have been able to take advantage of some great growth opportunities and purchase assets at a distressed price."

Low-yielding assets should be removed from portfolios, which could be traded up for opportunities in the United States, respondents to the survey said.

Among property types, apartments are probably the best bet as immigration fuels demand, and they offer the best security -- if investors can find any that are for sale. Office space has improved from a year ago, while retail and industrial properties are steady. Hotels are showing signs of life, but that sector still suffers from lower U.S. tourism.   Continued...

 
<p>Condo buildings are seen under in construction in Toronto June 19, 2009.REUTERS/Chris Roussakis</p>