Rebound in Canadian commercial real estate returns in 2010

TORONTO, Feb. 17 /CNW/ - Investment in Canadian commercial real estate bounced back last year with the strongest performance in three years, at 11.1%, as measured by the rebranded REALpac / IPD Canada Annual Property Index.

The annual total return - a marked turnaround from 2009's negative return, at -0.3%, and 3.7% in 2008 - is underpinned by a 4.0% capital growth and a 6.5% income return.

The REALpac / IPD Canada Annual Property Index measured C$97 billion of directly-held commercial real estate as at the end of 2010.

"A rebound in property values was entirely responsible for boosting the total return back into double-digit territory in 2010," said Simon Fairchild, Managing Director of IPD North America. "The return to capital growth last year follows two consecutive years of write-downs worth 9.3% at the all property level."

Stronger returns were posted in all of the four major sectors. For the second year in a row, Retails were the top performing sector with a total return of 15.6% in 2010, followed by Industrials at 8.8%, Offices at 8.5% and Residential at 7.6%.

Montreal led the six largest commercial property markets, with a total return of 14.2%; Edmonton trailed in last with 6.5%, the only market among the 6 where capital values did not show any recovery. Returns in the other 4 major markets were as follows: Vancouver (13.7%); Toronto (10.9%); Ottawa (10.6%); Calgary (8.7%).

Comparisons with other Asset Classes
Direct property investment underperformed the REIT market, which rebounded by 27.1% in 2010 according to the FTSE EPRA/NAREIT Index for Canada, as well as stocks which returned 14.9% according to the MSCI Canada Index, but outperformed bonds which returned 7.6%, as measured by the JP Morgan 7-10 Year Government Bond Index.

REALpac & IPD Partnership
On December 31, 2010, REALpac assumed the functions of the Institute of Canadian Real Estate Investment Managers ("ICREIM"), an organization originally formed to manage the Frank Russell Index for Canada and subsequently, the ICREIM / IPD Canada Property Index.

A new REALpac / IPD Canada Property Index Committee has been formed of former ICREIM members within REALpac.  "REALpac looks forward to working with ICREIM's former members to enhance the Canada Property Index," said Michael Brooks, CEO, REALpac.

In turn, REALpac and IPD signed an agreement on January 27, 2011, to work together and to rebrand the Canada Index as the REALpac / IPD Canada Property Index.

"We are looking forward to developing a strong working relationship with IPD", said Brooks. "Service levels will be maintained and enhanced within REALpac, and the new committee within REALpac will be focused on both expanding the number of participants in the IPD data set and improving the value reporting standards for the Index," he added. Brooks also thanked Graham Senst, the former President of ICREIM, for his years of service and dedication to ICREIM.

"Graham was instrumental in growing the depth and breadth of the index, and we are honoured to carry on his work" said Brooks.

Notes to editors:

IPD
IPD is a global information business, dedicated to the objective measurement of commercial real estate performance. As the world's number one provider of real estate performance analysis for funds, investors, managers and occupiers, IPD offers a full range of services including research, reporting, benchmarking, conferences and indices.

IPD operates in more than 20 countries including most of Europe, the US, Canada, South Africa, Australia, New Zealand and Japan. IPD's indices are the basis for the developing commercial property derivatives market, and the most authoritative measures of real estate returns worldwide. For further information visit www.ipd.com and for IPD's News Centre visit www.ipd.com/news

REALpac
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 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. Visit us at www.realpac.ca.

SOURCE Real Property Association of Canada

For further information:

Simon Fairchild, Managing Director at IPD North America at IPD,
+1 (312) 646-6241, simon.fairchild@ipd.com

James Wallace, Global Press Officer,
+44 (0)20 7336 4778, james.wallace@ipd.com

Michael Brooks, Chief Executive Officer at REALpac
+1 (416) 642 - 2700 ext. 225, mbrooks@realpac.ca

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Real Property Association of Canada

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