Q&A With Colliers Investment Analyst: Why Foreign Investors Are Turning To Canada
Canada has seen a surge of foreign investment recently with inbound commercial real estate activity hitting $1.4B—a 143% increase from a year before. In addition, US investments in Canada nearly doubled (48%) over the past six months.
Bisnow sat down with Colliers Canadian National Market Intelligence Analyst Sarah Goulding for a breakdown of why investors are looking north.
Bisnow: Why are US investors turning to Canada?
Sarah Goulding: There’s been a significant increase in foreign investment activity over the past six months, and we believe this trend will definitely continue through the remainder of this year. There’s a cost advantage from our dollar remaining low, especially for US buyers—we’re currently sitting at approximately 76 cents to the US dollar.
And when looking at pricing in Toronto and Vancouver and comparing it to other international cities like NYC and London, our lower dollar makes the product look quite attractive right now. Looking at the bigger picture, the Canadian economy is still considered to be quite a stable market.
Bisnow: Are there certain sectors of Canadian commercial real estate that are particularly attractive?
Sarah: First of all, Vancouver and Toronto appear to be the markets to watch, they’re both globally recognized cities, considered to be great places to live, we have a highly educated workforce, so those are the cities to watch.
From an investment perspective, I can't speak to all of the asset types, but what we are noticing is that, China, particularly, is taking on more trophy assets in the residential land space, as well as office product. From the US, we’re noticing quite a wide variety of assets being traded, most noticeably on the office side.
Bisnow: The US is considered the world’s safe haven for capital. Does higher Canadian investment mean people think the US is less safe?
Sarah: No, I wouldn’t say the US is less safe, just that Canada is a market to watch moving forward—especially with our dollar being low right now. It's a market that is gaining traction and interest from foreign investors. They are purchasing products in Canadian markets as well as US markets.
Bisnow: Do foreign investors see Canada as the cheaper option to get in on a booming North American market?
Sarah: Yeah, they’re looking at Canada right now because there’s a cost savings in buying long-term investments because the dollar is so low. It doesn’t mean our dollar is going to stay low long term, so as a long-term investment our market is an attractive one right now.
Bisnow: What are the specific advantages Canada has over the US in terms of commercial real estate?
Sarah: Outside of the exchange rate we looked at some of the things that any investor would be looking at when examining assets. We’re looking at economy, the workforce, livability. Canada’s top three markets, Vancouver, Calgary and Toronto, are ranked among the top five most livable cities in the world, according to the Economist.
Canada is ranked fourth in the world at leveraging their human capital. And this is an important stat to look at, because access to talent is a hugely important thing to a company when they’re looking to grow. Canada is also ranked as the least corrupt economy in the Americas. The US is ranked 16th in the world and Canada is ranked ninth. So there’s quite a few things to look at here.
