Finance

The Canadian Quartet, by JLL

File Type: Free Content, Article
Release Date: April 2014
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A new report by JLL identifies four Canadian cities — Montreal, Toronto, Calgary and Vancouver — as having the strongest potential and most opportunities for global real estate investors.

“These cities represent the country’s four largest metropolitan economies; they have the deepest corporate bases, the highest global connectivity, the most liquid commercial real estate investment markets,” notes “The Canadian Quartet: Playing on the World Stage.”

All four already feature among the global top 50 commercial property investment markets, and JLL expects each member of this “Canadian Quartet” to firmly secure a place on the world stage during the next decade, “joining an elite group of mid-sized cities that will leverage their skill base and their geographic and cultural advantages to create momentum that will ripple across all real estate sectors.”

In its examination of how the shape and form of these cities is changing, the report cites densification and a new mixed-use core in Calgary; a heavy focus on efficient and dense residential development in transit corridors in Toronto; the impact of sustainability efforts on the built form in Vancouver; and the creative influence on business and culture in Montreal.

All of these changes, JLL notes, are creating multiple and significant opportunities for commercial real estate development and investment.

“The next 5-10 years will see a transformation of the Quartet into larger, stronger, more attractive and dynamic cities that will firmly secure their leadership positions on the world stage,” concludes Brett Miller, president of JLL Canada, in his foreword to the report. What does this mean for foreign investment in Canada’s real estate market — which has recorded one of the world’s highest rates of return (second only to South Africa) since the global financial crisis?

Investment in Canadian real estate is “overwhelmingly dominated by domestic pension and insurance funds, REITs and property companies,” which limits opportunities for foreign investment. Canada thus has one of the lowest proportions of foreign capital invested in its real estate market in the world. “Strong real estate fundamentals and a stable macroeconomic environment make Canada an attractive proposition for foreign investors,” the report notes, “but new approaches to accessing product will be needed if they are to be successful.”