REALpac's sentiment survey reveals Canada's commercial real estate
leaders concerns about the economy, interest rates and asset prices
TORONTO, May 21, 2013 /CNW/ - Despite continuing strong market
fundamentals for real estate, commercial real estate leaders' are more
pessimistic about the future than they have been since 2009 due to
rising concerns about the state of Canada's economy, according to the
Second Quarter 2013 Canadian Real Estate Sentiment Survey released today by The Real Property Association (REALpac) and FPL
The quarterly survey measures the current and future outlook of Canada's
top commercial real estate executives regarding overall real estate
conditions, real estate asset values, and availability of capital. Top
findings for 2013's second quarter included:
The Q2 index of executive sentiment fell to its lowest level since 2009,
due to concerns about the state of the Canadian economy
Many Canadian market participants cite the future interest rate
environment as an area of anxiety
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 also 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?" said
Carolyn Lane, Vice-President, Membership, Marketing and Communications
of REALpac. "Our members are keeping a close watch on interest rates,
economic growth here and in the U.S., and also debating whether asset
prices can keep rising."
The survey's mixed findings were echoed by respondent comments such as:
"In Canada, property markets are very stable but the economy itself
isn't great. I've felt since mid-last year that Canada is sort of flat.
It worries me going forward."
"Canadian fundamentals are quite good with demand and supply in balance.
Development is ramping up, and access to debt and equity has never been
better or cheaper; this continues to push rates down and prices up."
"The market, I believe, is just not sustainable. There may be a slight
correction or slow down. The rates and terms are excellent; I just
don't know how that's going to last."
"Real estate investment opportunities in many parts of the United States
continue to become a more compelling part of the opportunity landscape.
Talent and capital will pursue those opportunities, to an extent, while
the Canadian markets cool in response to a weaker economic climate,
concerns over eventual higher interest rates, and the sustainability of
currently low cap rates."
The REALpac/FPL Canadian Real Estate Sentiment Survey is the industry's
most comprehensive measure of senior executives' confidence in the
Canadian commercial real estate industry. This quarterly survey of
CEOs, presidents, board members and other executives connected to the
real estate industry measured executives' current and future outlook on
three topics: overall real estate conditions; access to capital
markets, and; real estate asset pricing. Survey respondents represent
the retail, office, industrial, hotel, multi-family, residential, and
seniors residential asset classes.
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
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:
Carolyn Lane, Vice-President, Membership, Marketing and Communications, REALpac, 416-642-2700 x 223
Julia St. Michael, Manager, Research & Environmental Programs, REALpac, 416-642-2700 x 237
Erin Green, Senior Associate, FPL Associates L.P., 888-368-6598 (toll free).