Institutional investors to further dig their heels into real estate

Institutional investors to further dig their heels into real estate

Institutional investors to further dig their heels into real estate

Canadian institutional investors are looking to further grow their overall allocations to alternative investments, including real estate and other spheres, according to a new analysis by CIBC Mellon.

The study found that of the various alternatives accessible in Canada, real estate is the most favoured among these institutional investors, with 42% of respondents saying that they prefer this sub-asset class.

Other alternative investment favourites were infrastructure (20%), private equity (18.7%), and private debt/loans (17.9%).

“Alternatives continue to gain momentum among Canada’s institutional investors as they seek investments that can shelter their capital from short-term risks and market movements while also generating strong returns, though we are seeing Canadian investors becoming more particular about how they deploy their capital,” CIBC Mellon director (alternatives) Jon Lofto said.

“Canadian investors are seeking increased transparency through the adoption of new technologies, which suggests a growing need for advanced analytics and big data to support the decision-making process as well as a desire to deliver returns while considering environmental, social and governance (ESG) factors.”

Montreal is shaping up to be one of Canada’s best property destinations. With four top-rated universities and a highly developed tech scene, the city’s commercial market is amply equipped to draw in intellectual capital and wealthy international investors, according to Devencore CEO Jean Laurin.

“Canada is a safe place to park dollars and investments (given its good investment returns, low security issues and solid banking system),” Laurin explained, as quoted by RENX. “We’re welcoming to outside investors or people that want to move to the country.”

Toronto is another strong choice, with the market’s May home sales being 18.9% larger year-over-year.

“Households continue to see ownership housing in the GTA as a quality long-term investment as population growth from immigration remains strong and the regional economy continues to create jobs across diversity of sectors,” TREB president Garry Bhaura stated recently.