Canadian commercial real estate has long attracted international interest, primarily by American investors, but there has been a shift to Asian and European buyers in recent years. According to global real estate firm CBRE, the first half of 2016 has already seen $1.3 billion invested into commercial real estate markets across Canada by Chinese investors, albeit skewed by a single big sale.
The Bentall Centre in Vancouver was purchased for more than $1 billion by the Anbang Group, the same Chinese company that made international headlines in 2014 when it bought the historic Waldorf Astoria hotel for $1.95 billion in New York City.
The government of China recently implemented their “Go Global” policy to encourage Chinese companies to invest and operate abroad in an effort to diversify the nation’s economy. This policy likely inspired and encouraged the recent influx of Chinese investments in Canada, as it reduces their traditional dependence on domestic production and exports.
This year’s six-month worth of $1.3 billion investments in Canada from China and Hong Kong compares to $309 million last year, when China and Hong Kong only represented 4% of the commercial real estate market.
CBRE Canada, based in Toronto, says China’s state-owned firms have an increased interest in Canada because they are seeking safe havens for capital. As Europe continues to look increasingly uncertain because of Brexit, there could be more interest in Canadian commercial real estate in the year ahead, especially with the relatively low Canadian dollar.
Due to the energy sector collapse in Alberta, commercial real estate vacancies have hit historic highs in Calgary, but in Vancouver and Toronto, there is a great deal of interest. Some investors are even looking beyond the downtown areas, into the greater regions of each respective city, seeking even better return on capital.