Canada Developers Have a Taste for U.S. Hotspots
By Vittorio Hernandez | August 15, 2014 12:17 PM EST
While China has surpassed Canada in terms of sales volume, Canada remains the United States real estate market's top foreign buyer, the National Association of Realtors reported in its 2014 Profile of International Home Buying Activity.
A visitor looks at a model of a new apartment complex at a showroom of Evergrande Real Estate Group in Wuhan, Hubei province, in this November 9, 2013 file picture. China's third largest property developer, Evergrande Real Estate, has joined smaller peers in offering zero-interest downpayment loans, a practice reminiscent of the U.S. housing boom that precipitated the global financial crisis. REUTERS/Stringer/Files (CHINA - Tags: BUSINESS REAL ESTATE) CHINA OUT. NO COMMERCIAL OR EDITORIAL SALES IN CHINA
The country up north has been one of the U.S.' top patrons and even if its real estate market is just as hot, developers, banks, and investors there choose to place their portfolio in U.S. commercial real estate.
The U.S. real estate sector has high yield and rising valuations, according to a report on Canada.com. The report, which cited data from the Royal Bank of Canada, said that Canadians bought "between $15 billion to $19 billion each year worth of U.S. commercial real estate property in the last five years."
It added that the country accounted for one-third of the $38.7 billion invested globally in 2013, based on data from the Commercial Real Estate Development Association.
"For Canada, America offers great investment opportunity with attractive yield. And because of that, look for Canadian capital to continue to flow south, long-term," the report said.
The report also broke down purchases from local property management and development firms in Canada. It noted multi-million and billion-dollar investments made by Brookfield Property Partners, Ivanhoe Cambridge, and Oxford Properties in the United States.
Ivanhoe Cambridge bought two new office buildings in Chicago worth $360 million, following its earlier investment of $300 million for another 45-story office building. In February, Oxford Properties bought a $575 million office building in Park Avenue.
Brookfield Property Partners, on the other hand, bought Atlanta-based firm Industrial Developments International for $1.1 billion. The deal has allowed Brookfield to gain access to "62 million square feet of operating assets and 79 million square feet of land for with development potential," the report said.
In addition, the report pointed out Florida and New York, and upcoming markets like Arizona, are the recent favorites of Canadian investors to build new constructions. "Lower entry costs, high initial yields, strong growth and low interest rates" are the top reasons these areas are favoured by Canadian investors.
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