Doing business in Canada: Commercial real estate

Foreign investment in Canada’s commercial real estate market is increasing as it provides safe, liquid investments in almost all sectors and asset classes across the country. Investors have demonstrated a willingness to pay a premium for safe and stable commercial real estate investments in a time of global economic uncertainty.

Here is a snapshot of some Canadian real estate indicators as provided by CBRE Global Research and Consulting in its Q2 2013 MarketView: 2012 was a near record year in Canadian real estate with 2013 maintaining healthy activity; as at the end of 2012, Canadian pension funds had increased their real estate allocations to the highest levels on record, through both development and investment; real estate transaction volume for the first two quarters of 2013 was C$14.7 billion (US$14.3 billion) and forecasted 2013 investment volume is C$26-27 billion; capitalization rates have begun to stabilize at historic lows and financing rates continue to be competitive.

Attractive market

Given these dynamic indicators, Canada has a robust domestic real estate investor community, with strong and proven public market investment trusts, pension funds and private equity investors leading the charge. That said, we are beginning to see a slow and steady increase in the number of global investors who are forming strategic ventures with Canadian real estate entities with a view to tapping into the Canadian commercial real estate market.

Simon Crawford is a partner at Bennett Jones LLP, a law firm with offices in Calgary, Toronto, Edmonton, Ottawa, Dubai and Doha, and representative offices in Washington DC and Beijing.