Foreign Investment into Canadian Commercial Real Estate Sinks by 70%

Steve Saretsky -

New data from Altus Group shows foreign investment in Canadian commercial Real Estate dropped by 70% through the first half of 2019. Transactions totalled just $1.5 billion through the first 6 months, that’s down from $5 billion during the same period last year.

commercial real estate in Canada
Foreign investment in Canadian commercial Real Estate through first half of the year. Via Bloomberg

Altus Group suggests the steep decline is due to a shortage of core assets such as top-tier office buildings, and rental apartments in urban areas, while also suggesting this year’s tally should rise significantly when pending deals across Canada complete in the coming months.

However, there is arguably more to the story here. The same phenomenon is being reported in the United States. Through the first half of 2019, deals totalled $16.9 billion, down from a record $32.7 billion in the same period last year, according to a report by CBRE Group Inc.

Commercial Real Estate sales
Commercial Real Estate sales in the US through the first half of the year. Via Bloomberg

This is part of a larger global slowdown, particularly out of China, where the global buying spree appears to have come to and end, at least for now. Chinese companies have become net sellers of global assets this year for the first time since corporations from the country became big players in international mergers and acquisitions a decade ago. Chinese companies have agreed to sell about $40 billion in overseas assets so far this year, up from $32 billion for the whole of last year, according to data from Dealogic. At the same time, Chinese groups have bought just $35 billion of overseas assets this year, making the country a global net seller.

Chinese capital has retrenched as it aims to beef up their foreign exchange reserves in the midst of a slowing economy and trade war. This has had an obvious ripple effect, particularly for real estate markets.

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