Foreign and Domestic Real Estate Investors Continue to Look to Thriving Regional Markets to Build Their Portfolios

Ontario and British Columbia remain key markets for real estate investors

MISSISSAUGA, ON, Nov. 4, 2016 /CNW/ - Morguard Corporation (TSX: MRC) ("Morguard") released today its third quarter 2016 Economic Outlook and Market Fundamentals Report – a behind-the-scenes look at the trends and activity in the Canadian investment real estate market.

Despite uncertainty in Canada's economy, the Canadian real estate market continues to attract high levels of domestic and foreign investment. Although the cost of investing in the sector is high, particularly in the commercial office asset class, there remains strong competition for high quality assets – largely due to a lack of stable alternative investment opportunities.

Q3 2016 Key Findings

• Stock markets rebounded from Brexit to return record performances – impacts were minimal in Canada
• Canada's economy contracted slightly over the second quarter, largely due to the Alberta wildfires and slowdown in oil sands activity
• Domestic and foreign investor confidence continued to provide healthy liquidity in the third quarter, keeping with this year's trend
• Multi-suite residential is a popular choice for investors, and is expected to remain as such for the foreseeable future
• Canada's office leasing market is fragmented, as centres directly tied to the overall economy, like Toronto and Vancouver, show strong performance
• Canada's industrial property sector continues to exhibit broadly healthy leasing market fundamentals, with only Calgary and Edmonton registering weakness

To download the third quarter Economic Outlook and Market Fundamentals Report, visit www.morguard.com

Investor Confidence Continues to Support Strong Performance of Canadian Real Estate Market

Global equity markets rebounded after the Brexit vote, with some regions registering solid year-to-date progress. In Canada, year-to-date gains entered double digit territory in September as stock market volatility decreased. As investor confidence stabilized in the wake of Brexit, the real estate market continued to experience strong demand from foreign and domestic investors.

"The Brexit result, coupled with the belief that the U.S. had entered the late stages of its economic cycle, all drove foreign investment interests," said Keith Reading, Director of Research at Morguard. "Off-shore groups, with Chinese and European capital, looked to the Canadian property market as a relatively secure destination for their investments." 

Domestically, Canadian pension funds, private capital and institutional groups continued to source core assets in major markets over the third quarter. Canada's mature commercial property investment performance will continue, as private capital drives activity and pension funds and other institutions make carefully curated acquisitions.

The Canadian real estate market will continue to attract high transaction rates, despite the cost of investing in the sector, partially due to weak alternative investment opportunities.

Multi-Suite Residential Markets Remain Highly Sought After

Multi-suite residential properties are in high demand for investors and are expected to continue to generate strong interest for the foreseeable future. High levels of investor interest in the sector were evidenced by third quarter sales as groups with existing portfolios look to capitalize on the sector's history of security.

In addition to experienced investors showing interest in the sector, new groups have also begun to acquire multi-suite residential assets. "The long-term stable and secure performance of multi-suite residential units has attracted new investors to the market," said Reading. "New investor groups see this asset class as a relatively safe investment in an uncertain economic environment."

While risks related to the Canadian and global economy have risen lately, investors will continue to look to Canada's real estate sector, and more specifically the multi-suite residential rental sector, to provide a buffer against the potential impacts of any further market erosion.

Leasing Market Performance Continues to Become Increasingly Fragmented

The leasing market continues to reflect regional market strengths, as demand remains strong in regions directly tied to Canada's overall economic performance. The office and industrial leasing market on aggregate for Canada are softening, however regional performance in Toronto and Vancouver have proven robust in the third quarter.

The strength of the national leasing backdrop was a catalyst for investment demand, as product availability in the nation's largest markets continued to fall short of demand in the third quarter. "In Toronto and Vancouver healthy and stable leasing fundamentals were reported," said Reading. "Core properties in these markets are highly sought after, increasing their value and competition."

About Morguard Corporation

Morguard Corporation (TSX: MRC) is a major North American real estate and property management company. It has extensive retail, office, industrial, multi–suite residential, and hotel holdings owned directly, or through its investment in Morguard REIT (TSX: MRT.UN) and Morguard North American Residential REIT (TSX: MRG.UN). Morguard also provides real estate management services to institutional and other investors. Morguard's total assets owned and under management is valued at $19.9 billion. Visit www.morguard.com.

SOURCE Morguard Corporation