Current World Trends Impacting Commercial Real Estate Investors
There are always changing trends affecting the Canadian investor's portfolio. With 2014 coming to an end, here are three of the biggest trends we think that will continue impacting investors in 2015.
Current trends in oil prices and the pipeline vote don't appear to bode well for the Canadian industrial property sector. Even though a weaker dollar might compound the impact, oil prices are highly volatile and Canada's embracing of renewable energy promises to keep industry strong.
Canadian Housing Market
According to a new report from the Bank of Canada, house prices may be overvalued by as much as 30 per cent. The residential housing sector appears to remain the top concern of leaders of the Canadian financial system.
Many believe that Canada's strong employment and rising wages will continue to help the nation's housing market negate potential downfalls. However, pessimistic reports like this and other media reports can also impact the market, just as has happened during the US housing crash of 2006.
Rising Demand for Canadian Office and Retail Space
The battle for retail and office space continues to heat up. This continues to be especially true in Edmonton, where many global retailers are choosing as their first forays into Canada, while a plethora of local startups are maturing to the point of needing a local physical presence.
This trend has strengthened the performance of retail properties and is responsible for strengthening rent rates, occupancy, yields and property values.
The convergence of these recent trends highlights the advantages of commercial real estate investments. For example, smaller retail plazas offer plenty of opportunities for private investors, as they provide basic needs of consumers and are proven to be frequented in all market cycles by both renters and owners.