Despite continuing strong market fundamentals for real estate, commercial real estate leaders are more pessimistic about the future than they have been since 2009, according to a recent survey by the Real Property Association of Canada (REALpac) and FPL Advisory Group.
The quarterly survey measures the current and future outlook of Canada’s top commercial real estate executives regarding overall real estate conditions,asset values and availability of capital.
Top findings for the Second Quarter 2013 Canadian Real Estate Sentiment Survey include:
- Executive sentiment fell to its lowest level in four years due to concerns about the state of the Canadian economy.
- The future interest rate environment is an area of anxiety for many Canadian market participants.
- While real estate continues to trade at compressed cap rates, views regarding the sustainability of current asset pricing are mixed.
- Debt is still seen as widely available. Lenders are eager to lend and continue to search for returns.
- Equity capital is plentiful as investors continue to turn to real estate in search of higher returns.
“Canada’s real estate industry has been on a tremendous run since 2009, and the question we keep hearing is, ‘How long will it last?’,” says Carolyn Lane, vice-president of membership, marketing and communications at REALpac. “Our members are keeping a close watch on interest rates (and) economic growth, (both) here and in the U.S., and also debating whether asset prices can keep rising.”
