By Allison Lampert, Nia Williams
MONTREAL/CALGARY: Canada’s commercial real estate market hit a record C$11.16 billion ($8.41 billion) in quarterly transaction volumes and is on track to reach new highs for the year, as investors’ hunt for yield and gains in the oil-producing province of Alberta bolster activity, real estate services firm CBRE Limited said on Monday.
A recovery in oil prices and a few large transactions helped Calgary post its best third quarter in over two years with C$1.2 billion ($904.23 million) in investment and a rise in activity in the hard-hit, commodity-driven city, CBRE wrote in a report to be published on Monday.
Hard hit by a two-and-a-half-year slump in the crude market, Canada’s oil and gas industry is starting to show signs of cautious optimism as benchmark oil prices tick higher.
Some companies are increasing 2017 capital spending budgets, a couple of deferred oil sands projects are restarting and the drilling rig count in Western Canada is inching higher, albeit from very low levels.
“With oil prices beginning to slowly drift upwards and improved market sentiment, we’re seeing increasing activity in Calgary, particularly for prime, well-leased assets,” Peter Senst, president of CBRE Canada Capital Markets, said in a statement.
“Although a few large transactions helped make Q3 a very strong quarter for Calgary, what’s more encouraging is the 21 percent increase in the number of deals made compared to the previous quarter.”
Nationally, real estate transactions rose 87 percent in Canada during the third quarter of 2016, compared with the same period in 2015, and were up 13 percent compared with the second quarter of this year, CBRE wrote.
Foreign capital, which totaled C$3 billion ($2.26 billion) during the quarter, represented 41 percent of all transactions worth C$10 million ($7.54 million) and over, and was directed primarily at Canadian hotels.
CBRE forecasts that real estate activity will exceed C$35 billion ($26.37 billion)in 2016, setting a new Canadian record and marking the highest level since 2007, which generated C$32.1 billion ($24.19 billion) in deals.
“Government bond yields are at all-time lows and the stock market is trading on historically high price-earnings ratios which is driving interest into hard assets such as real estate,” Senst said. ($1 = 1.3271 Canadian dollars) (Editing by Paul Simao)
Source: Reuters