Real estate for sale in Canada’s commercial sector is available for purchase.

Jean Francois Desormeaux

April 12, 2022

 

 

Foreign investors are entering the Canadian housing market. Last year, offshore investment accounted for 20% of $10.6 billion in deals, up from 5% in 2015. This year, Chinese investment accounted for 10% of agreements, up from 1% in 2015.

According to Jean Francois Desormeaux, with a projected 1.2 million new entrants to Canada in the next three years, demand for space in major urban areas is likely to rise. More than 60% will be economically qualified, thus they will be seeking for space near their jobs. Also, although interest rates are increasing throughout the country, they will stay steady in certain areas. That is, the Canadian commercial real estate market is booming!

In a good economy, commercial real estate is in high demand in Canada. Customers expect speedy shipment from online retailers, so they build fulfillment facilities in Canada. As a result, Canadians have more purchasing power than before. Due to the limited supply, commercial real estate is a profitable investment. But investors can expect some ups and downs along the road.

In 2022, the Canadian economy is expected to expand at a four-to-five percent annual pace. Despite the early pandemic’s expansion of the goods manufacturing sector, the economy’s future depends on the services sector. The economy is expected to grow in the future years, boosting commercial real estate performance. After that, the market is expected to stay steady or perhaps grow.

Investing in Canadian real estate may be done in numerous ways. Personal ownership is a possibility as well as a general partnership or restricted partnership. The laws and regulations for foreign investors should be carefully considered. The buyer is responsible for title, zoning, leases, surveys, and other due diligence. If an investment isn’t tax-deferred, seek an accountant or tax counselor.

Dollar weakness has been blamed for the recent drop in Canadian commercial real estate investment. Sino-Canadian investors currently dominate. While Asians have traditionally bought smaller homes in Vancouver, they are increasingly buying bigger, more costly homes throughout Canada. So far this year, Chinese and Hong Kong purchasers have spent $1.3 billion on commercial real estate, compared to $309 million last year.

Jean Francois Desormeaux pointed out that, during the third quarter of 2020, Toronto’s multi-suite residential sector beat both retail and office. The office sector will likely decline in 2020’s fourth quarter, while multi-family rentals will likely expand. Despite the market’s gloom, the multi-suite residential sector shines. Buying commercial real estate in Toronto near a retail district makes sense.

When buying Canadian land, developers need factor in development fees. Municipalities levy development fees for services. These fees may not be imposed on the development site but nearby. The Bank of Canada has cautioned against unsustainable Toronto and Vancouver property prices. Vancouver has even suggested a levy on abandoned properties. In April, the benchmark price for detached homes in Canada was $1.4 million, up 30% year-on-year.

Strong retail expansion is another significant driver of industrial property demand. As a consequence, large retailers are investing in new distribution hubs to meet demand. Also, the eastern Canadian building market has peaked and will stay stagnant for years. The industry is likely to develop, although at a slower pace. According to real estate broker Bill Bird, demand for industrial space often exceeds availability.

In Jean Francois Desormeaux’s opinion, while Toronto’s commercial office market is slowing in terms of new building, subleasing has been active since 2000. However, most new building is built-to-suit. In Toronto, only 5–6% of the total available space is occupied. While tiny building rents are rising, bigger block rents are falling. Both cities’ office vacancy rates are predicted to rise to 10% in 2016 and 7% in 2017.