A recent report into real estate investment trends has cast a very interesting light upon Canadian investors who seem to have a deep and meaningful love of New York City real estate. Canadian investment in New York City real estate over the last 10 years has topped $15 billion which is an enormous amount of money. When you bear in mind that second in this league table is the UAE at $8.8 billion it certainly puts the situation into perspective.
There would appear to be a number of reasons why Canadian real estate investors are looking towards their US cousins and why they are likely to continue to do so for some time to come.
The bottom line is that unless the US economy performs well the worldwide economy will struggle, competing economies come and go but the US is still the engine room of the worldwide economy. This perfectly explains the ever increasing interest in US real estate from overseas investors and in particular their Canadian counterparts. It is also worth noting that while the Canadian and US economies are different in some ways there are obvious cultural overlaps which seem to put the minds of Canadian investors at ease.
Where are the investment funds coming from?
Those who follow the investment markets will be well aware that Canada has some of the largest pension funds in the world. Indeed the likes of the Canada Pension Plan Investment Board and the Ontario Municipal Employees Retirement System are massive players in the worldwide real estate market. In these relatively volatile times it looks as though many of Canada’s larger long-term investors are happy to park their hard earned investment funds in US property.
There are also some relatively large insurers and asset managers actively involved in some of the US real estate markets largest projects in recent times. Make no mistake about it, Canadian investment in US real estate can move markets and is a vital cog in this enormous machine.
Limited real estate assets
Despite the fact that Canada is a relatively large country much of it is uninhabitable and there are only a limited number of large real estate markets. As a consequence, rather than paying what some believe to be inflated prices for Canadian real estate (due in the main to its scarcity) there is a continuing trend for investors to look over the border. When you also throw in the oil income which Canada boasts it is perhaps just as well there is an enormous real estate market on the country’s doorstep.
Interestingly, the Canadian authorities have their own real estate market under review amid concerns of sharp practices in some areas. Thankfully, the authorities seem to have a handle on this particular issue and it would now appear to be under control.
Canadian investors have always been fond of the US real estate market with New York City seemingly a particular favourite. When you bear in mind the enormous amount of money available through Canadian pension funds and financial institutions it does make sense to take a short skip over the border to expand your real estate exposure. Indeed, the cultural and language similarities between Canada and the US are also a plus point for Canadian investors. This love affair seems set to run for some time to come!