2013 Canadian Real Estate Outlook

Posted by Robbie Johal on Tuesday, January 29th, 2013 at 6:50pm

While other nations are struggling to survive economic turmoil and unwanted debt levels, Canadian real estate values have remained consistent. This is quite noticeable as even foreign investors are expanding their horizons to the Canadian market. The immigration rate in Canada has also grown in the past years resulting in an increase in condo and housing sales. The real estate residential sector will be Canada’s most stable market in 2013. The occupancy rate is currently over 98 percent this year.

Canadian real estate proves to have a positive outlook in 2013. The nation’s real estate market will maintain its solid fundamentals even though other countries have been experiencing uncertainties and inflation. The property values will remain in a steady state just like last year. There will be increasing investment demand from local and overseas buyers. This will be coupled with small bond yields and interest rates. Rental rates will remain at the current state or may experience modest increases. The income performance level will be stable as the rental markets show steady occupancy rates and good demand.

Office construction rates are also at a safe level. This guarantees good rental market levels in 2013. However, current office developments in Calgary, Toronto and Vancouver pose risk towards the year’s end. The retail sector will show increasing developments in technology and marketing behaviors with the arrival of U.S. retailers. This is because the broader sector will strive to compete with new strategies to provide residents with useful advantages.

Canadian Real Estate Investment

Canada’s real estate market remained stable and untouched despite the upheavals that other nations encountered in 2012. This also shows the positive outlook that the nation has for this year. The Canadian real estate market will continue to compete with the continuing slow and uncertain market trends in Europe. Canada will also benefit from the increasing stability in the U.S. economy. The Canadian economy will experience moderate expansions from global growth trends. Industries that depend on the business cycle will experience stable if not decreased demand. However, the commercial real estate market is expected to stay stable on the national level. With this, investors will continue to provide funds for the nation’s real estate sector. Therefore, there is expected to be moderate and stable growth in the real estate market for 2013.

In 2012, Canadian commercial real estate owners benefited from the positive outcomes from market fundamentals. This is also expected for the real estate sector in 2013. Unpredictability in the larger investment market will continue to put the Canadian real estate at a privileged level for investors. The property values that have remained on the rise for the past years are expected to be stable this year. The increase in demand and occupancy will continue to benefit investors. In addition, the positive income performance that favored investors in the past year will continue to do so in 2013.

There will be a positive real estate capital flow for this year as the demand will continue to increase over the supply of assets on the market. Transaction volume will show improvements this year while investors chase low interest rates. As a result, Canadian real estate owners will continually benefit. This will increase the rate of investment in Canada from new entries and existing businesses.

The office sector in Canada will also experience stability and strength in 2013 with its positive outcomes from the past year. Moderately robust outcomes are expected for 2013. The office sector will still remain attractive for investors and residents. Occupancy levels for this year will stay strong. This is particularly for the leading central business districts in the nation. Rental rates will also continue to increase despite only a slight rise in space demands.

Toward the year’s end, there will be new developments in the Vancouver and Toronto markets. This will heighten the leasing risk for existing landlords and building owners. However, the expected growth in business may still be able to cover the increase in the leasing space. For the next 12 months, there will be a continuation of positive and stable results that were also seen in 2012. This will drive more investors and improve performance for those with assets in the market.

Canada’s industrial sector is expected to experience slight positive growth in 2013. There will be a slow recovery rate in the leasing market with an expected economic expansion of 2 percent or less. More positive results will come in western Canada while lower rates are expected in the eastern market. As a result, there will only be a slight increase in rental rates that will be below the levels seen in 2008.

Industrial developments will stay below average, but they will be higher than in the past few years. Tentative trends in the Edmonton and Calgary markets will result in more projects. The investments in the industrial sector will show continued strength. This will result in healthy demand, lower rates of assets for sale and good returns.

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