Commercial Real Estate Leaders Slightly More Optimistic

REALpac's sentiment survey reveals Canada's commercial real estate leaders slightly more optimistic than in Q4 2012

TORONTO, Feb. 21, 2013 /CNW/ - In the face of strong fundamentals, Canada's commercial real estate leaders felt more positive about the health of the sector in the first quarter of 2013, but lingering uncertainties continued to temper their optimism, according to The First Quarter 2013 Canadian Real Estate Sentiment Survey released today by The Real Property Association (REALpac) and FPL Advisory Group.

The quarterly survey measures the current and future outlook of Canada's top commercial real estate executives on overall real estate conditions, real estate asset values, and availability of capital. Top findings for 2013's first quarter included:

  • Asset prices continued to see considerable gains
  • Some respondents expressed concern about future interest rate change, while others do not expect a reversal of this trend in the near- to mid-term
  • Debt is widely available despite heightened underwriting requirements; lenders remain eager to put capital to work
  • Equity capital is abundant as investors continue to search for yield, though many respondents cited deployment of capital as a challenge

Underscoring such findings were respondent comments such as:

"The market is fueled by a lack of reasonable investment alternatives. No other option can offer the yields and relative safety of real estate. As long as investors have nowhere else to go and real estate supply and demand fundamentals continue to remain strong, this rally still has legs. That said, any shift in fundamentals or change in credit conditions will cause an immediate adjustment and stall the cycle."

"I think we're back to where we were in 2006 and 2007. Cap rates are even lower than they were. There is still a lot of capital chasing assets. The financial market is there and available. We're seeing more and more high net worth individuals investing in Canada for two reasons: one, returns are still very good in Canada for certain foreign investors (those from Europe, Africa, Asia), and two, the economy is doing well."

"There is so much money chasing property in Canada and the REITs, using a lot of leverage, have been dominating the buyer profile. Because of that, a lot of our institutional clients are focusing on the U.S. right now just to find places to deploy capital. The biggest challenge right now is helping people find a way to deploy the available capital."

To download a copy of the Canadian Real Estate Sentiment Survey, go to www.realpac.ca > Publications > Canadian Real Estate Sentiment Survey (http://www.realpac.ca/?page=CanadianRealEstateSS).

About the Real Property Association of Canada

REALpac is Canada's premier industry association for investment real property leaders. Our mission is to collectively influence public policy, to educate government and the public, and to ensure stable and beneficial real estate capital and property markets in Canada.

REALpac members currently own in excess of $180 Billion CAD in real estate assets located in the major centres across Canada. Members include real estate investment trusts, publicly traded and large private companies, banks, brokerages, crown corporations, investment dealers, life companies, lenders, and pension funds. For more information, please visit us at www.realpac.ca.

About FPL Advisory Group

FPL Advisory Group (FPL) is a family of companies focused on providing highly specialized advisory services to the real estate and related operating and financial services industries. Through our complementary practice areas, we work with our clients to develop the right talent, leadership, structure, and strategies for success in today's intensely competitive marketplace.

FPL is comprised of two primary operating companies that work together to serve a common client base. Ferguson Partners provides executive, director, and professional search services.  FPL Associates provides a range of specialized consulting and finance-related services in the areas of compensation, management consulting, executive onboarding, and succession planning. The firm is headquartered in Chicago and maintains offices in London, New York, Boston, and Tokyo. For more information, please visit www.fpladvisorygroup.com.

SOURCE: Real Property Association of Canada

For further information:

Julia St. Michael, Manager, Research & Environmental Programs, REALpac, 416-642-2700 x 237 or Erin Green, Senior Associate, FPL Associates L.P., 888-368-6598 (toll free)