Canadian CRE Delivers-Double Digit Returns, by REALpac/IPD

File Type: Free Content, Article
Release Date: February 2014
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Canadian commercial real estate continues to deliver double-digit performance, according to the latest Real Property Association of Canada and Investment Property Databank Ltd. (REALpac/IPD) “Canada Property Index,” released at the REALpac/IPD Canada Real Estate Investment Forum in Toronto on Feb. 11. The index measures 42 contributing portfolios and 2,318 assets valued at CA$117.6 billion. The 2013 market index total return was 10.7 percent. Calgary, Edmonton, and Halifax saw the highest total returns (12.9, 12.8 and 11.3 percent, respectively), while Ottowa/Hull saw the lowest (6.8 percent).

The index notes that large malls are “a class apart,” and adds that their strong performance pulls the overall index return above 10 percent, with all other property sectors producing single-digit returns. Regional and super-regional malls clearly were the best-performing commercial property sectors (with returns of 14.2 and 14.1 percent), followed by research and development (9.7 percent), warehousing (9.1 percent) and neighborhood shopping centers (8.9 percent). Low-rise office properties showed the weakest returns (6.3 percent).

Overall investment activity soared to a record CA$19 billion in 2013. New acquisitions of CA$6.7 billion - the second-highest on record - were offset by record dispositions of approximately CA$3.3 billion. Net investment eased to CA$3.3 billion, while development expenditures continued to rise, to CA$2.2 billion.