Positive Performance Predicted For Commercial Real Estate

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    Morguard is predicting a fourth consecutive year of positive performance for Canada’s commercial property sector in 2015. Investors are expected to achieve attractive returns once again, driven in large part by the stability and growth in rental income. Sales of commercial property will top $25 billion ‒ slightly below the 2014 total, but higher than the long-term average of $20.7 billion. Core offerings will receive interest from pension funds, institutions, private capital groups, and capital market groups who continue to slowly return to the market. This demand will hold property values at the peak of the cycle, having stabilized through much of 2014. “Investment returns will be largely income-driven, with some investors looking increasingly to new construction as a core strategy,” says Keith Reading, director of research at Morguard. “Boosting income performance will be a focus for existing portfolios. Investors have already shown a willingness to move up the risk ladder in sourcing value-add opportunities to achieve their investment objectives.”