Interesting article from the Financial Post...
OTTAWA - Real estate investment is ready for a rebound, according to an international survey that suggests both real estate investors both in Canada and abroad are ready to put some faith - and some money - in the market.
Respondents to the 2010 Global Investor Sentiment Survey said access to financing was becoming easier, and the majority of private and institutional Canadian investors plan to use that money at home, according to Colliers International, a global real estate services company which conducted the survey.
Responses to the survey suggest that activities will start to pick up in the third quarter of this year.
``Cautious optimism is the prevailing wind across Canada,'' wrote report authors Wayne Duong, Canadian director of research, and Milton Lamb, chair of Colliers Canada's national investment team, adding that now is the time to buy, before interest rates go up as expected this summer.
While Canadian investors don't believe the market has bottomed out yet, 65 per cent of them plan to make real estate purchases in the next year; 64 per cent of global investors signalled their intention to do the same.
The survey of more than 240 major real estate investors included 26 large Canadian institutional property investors, most of whom indicated they would be making Canadian purchases this year - 27.8 per cent planned to buy in Toronto; 16.7 per cent planned acquisitions in both Vancouver and Montreal; 14.8 per cent in Edmonton; and 11.1 per cent in Calgary. Eight out of 10 respondents said they had no intentions to invest overseas.
``On a risk-adjusted basis, Canadian investors still see Canada as a preferred investment destination that offers a higher return on investment compared to the U.S., in part because of the turmoil that still lingers south of the border,'' said Lamb. ``Additional reasons respondents gave for focusing on domestic investments range from the quality of assets to diversification of income stream, availability of capital or better valuation matching income.''
Canadian investors are also cleaning out their portfolios, with 54 per cent saying they plan to divest under-performing or non-core assets.
Before real estate investments start to pick up, buyers and sellers will have to take some steps toward each other on price - right now buyers think price are too high and sellers think they're too low, write Duong and Lamb.
``In fact in the first quarter of 2010, there are virtually no Canadian properties for sale as sellers have been reluctant to sell. As a result, the deal flow has been very weak,'' wrote Duong and Lamb. ``In line with the expectation the recovery will take time, our investors see a `normalcy' of transactions to occur during this year; consensus seem to favour this starting in Q3 of 2010, through to Q2 of 2011.''