Foreign investors, deterred from Vancouver’s residential property market by the 15 per cent tax, are likely to increasingly focus on commercial real estate.
A report from RE/MAX reveals that the Vancouver commercial sector is outperforming most other Canadian markets, driven by interest from local investors. But foreign investors are expected to follow.
“Over the next several months, we may start to see more interest from foreign investors. As a result of the recent foreign buyer tax on residential properties, buyers who are interested in investing in Greater Vancouver may start to shift their focus to commercial properties,” said Elton Ash, Regional Executive Vice President, RE/MAX of Western Canada.
The commercial sector in Vancouver’s Lower Mainland grew 94 per cent in dollar value terms in the first half of 2016 compared with the same period of 2015.
It’s not the same elsewhere though.
Calgary saw a 12 per cent year-over-year decline in sales of commercial real estate in the first half of 2016 with offices showing a 25 per cent slump. Edmonton shows an 8 per cent decline in commercial sales with land sales falling 40 per cent.
“There continues to be demand for good quality product in the Calgary and Edmonton markets, though a full recovery is not expected until oil prices rebound,” said Ash. “For investors, there will likely be some good opportunities coming on to the market later this year and next year as owners start to sell off assets.”
Saskatoon and Regina remain strong in the commercial sector with particular interest from REITs. Winnipeg demand is outpacing supply and is expected to stay strong into 2017.