Foreign investment in Canadian commercial real estate has dropped 70 per cent in the first half of the year amid a scarcity of large portfolios for sale, data from Altus Group Ltd. shows.
Transactions totalled $1.5 billion, down from $5 billion in the first six months of 2018, when Blackstone Group Inc. (BX:UN) and Ivanhoe Cambridge Inc. bought a Dream a Canadian industrial landlord for about $3.8 billion
The core assets that institutional investors favour, such as top-tier office buildings or rental apartments in urban areas, are in short supply on the Canadian market, sellers’ price expectations may be higher than what buyers are willing to pay, he said. Investors also may be more conservative because of concerns of a global economic slowdown.
This year’s tally will rise significantly when pending deals across Canada are completed in the coming months. Chicago-based Ventas Inc. announced in June that it would invest in a Canadian senior-housing portfolio valued at $2.4 billion. Earlier this month, Bloomberg reported that Oxford Properties Group is close to a deal to sell its iconic Fairmont hotels portfolio to Singaporean sovereign wealth fund GIC Pte.
Purchases in the country by all buyers, including from Canada, totaled $25.5 billion in the first half, down 28 percent from a year earlier. Investment in rental apartments increased across Canada, while retail sales declined.