-- Two in three investors plan to expand acquisitions over the next year with a strong appetite for domestic properties; Sentiment shows market hasn't bottomed out yet but expects a fast recovery --
TORONTO, May 4 /CNW/ - Although Canadian institutional and private real estate investors think the market has yet to reach its lowest point, they are cautiously optimistic that a fast recovery is on the horizon and are honing their expansion strategies, according to Colliers International's 2010 Global Investor Sentiment Survey. Two out of three Canadian investors (65%) indicated they are considering further acquisitions over the next 12 months, mirroring the global trend (64%).
The global survey of more than 240 major real estate investors (including 26 large Canadian institutional property investors) with a total investment portfolio of over $300 billion, also found a strong appetite for domestic investments. The vast majority (85%) of Canadian respondents who indicated acquisition plans intend to focus on the domestic market, especially in locations such as Toronto (27.8%), Vancouver and Montreal (16.7% each), Edmonton and Calgary (14.8% and 11.1% respectively). The lack of appetite for foreign investments is also reflected globally with eight out of ten respondents having no off-shore portfolio or 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," says Milton Lamb, Chair, National Investment Team, with Colliers International in Canada. "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."
The survey also reveals that Canadian investors are not only looking for buying opportunities, but also looking to divest under-performing or non-core assets (54%). At the same time another 42 per cent of investors are playing the waiting game, holding firm on any asset selling plans to avoid sale at the bottom of the cycle. Respondents predict that the price-expectation gap between buyers and sellers, which has brought deal flow to a near standstill, will narrow closer to the end of the year. The concensus among investors surveyed is that the market will resume to normalcy of transaction stream starting in Q3'10 through to Q2'11.
Milton Lamb adds "If there is a lesson to be learned from this recent recession it would be about the importance of proper assessment of investment opportunities in the context of market cycles. The commercial real estate market is not a stock market where one can enter and exit so easily, which means proper research and analysis become more important than ever."
Additional Findings and Highlights
- Nearly three out of four (73%) Canadian investors feel that access to
capital became easier over the past year and 54 per cent say the
movement toward easier access to debt to continue. Additionally and
in-line with the BoC recent announcement, 58 per cent of respondents
believe the cost of borrowing will climb over the next 12 months.
- Investors expect to see rents continue to decline and hit bottom at
the beginning of 2011. This places tenants whose leases set to expire
this year in a better position when negotiating with their property
- Fifty per cent of Canadian respondents, most of them institutional
investors, are willing to pay a premium for sustainable buildings,
compared to only 30 per cent of U.S. investors.
Editor's note: the global and Canadian research reports (graph and charts included) are available upon request. For all the latest international news from Colliers visit www.colliersnews.com
About the Global Investor Sentiment Survey
The inaugural 2010 Global Investor Sentiment Survey was conducted by Colliers International between February 15th and March 1st and includes responses from 244 major institutional and private investors whose combined investment portfolio exceeds $300 billion. Survey participants represent a broad cross-section of property investors across the globe including 26 large Canadian institutional property investors with a median investment portfolio of over one billion dollars. The survey measured investors' sentiment and their 12 months outlook on topics such as investment activity, market conditions and risk, access to debt and financing, asset valuation and sustainability.
About Colliers International
Colliers Macaulay Nicolls Inc. (CMN), operating as Colliers International, is a leading global real estate services company that provides a full range of services to real estate occupiers, developers and investors worldwide. The organization's 12,700 employees span the globe in 294 offices in 61 countries. On a worldwide basis, Colliers manages more than 1 billion square feet and has revenue of $1.6 billion. Services include brokerage, property management, hotel investment sales and consulting, corporate services, valuation, consulting and appraisal services, project management, mortgage banking and research. Colliers International is a worldwide affiliation of independently owned and operated companies.
SOURCE Colliers International
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