Investment Outlook 2023
Investor confidence and caution were evident in Canada’s commercial investment property sector in the latter half of 2021 and first half of 2022, with the industrial and multi-suite residential sectors being the most sought-after. Riskier properties were of interest to a relatively small buyer pool. Investor caution levels increased significantly by spring 2022 due to the recent rise in commercial property sector performance risk and higher interest rates eroding investment performance. Capital flow peaked recently, with a combined total of $36.3 billion of investment capital injected into the sector in the country’s major markets during the first half of 2022. Canadian commercial property sector investment performance strengthened substantially recently, with the industrial sector continuing to outperform, and the multi-suite residential rental sector also performing well. Capitalization rates for the sector began to rise recently for the first time in several years, with upward pressure likely to continue due to rising interest rates and elevated commercial property sector risk. Overall, commercial property sector performance risk will remain elevated over the near term, attributed in part to Canada’s economic outlook.
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The information contained in this post is taken from Morguard’s 2023 Canadian Economic Outlook.
DISCLAIMER: This information is for educational and informational purposes only and should not be considered as investment advice. Any investment decision should be made based on your own research and analysis. You should consult with a financial advisor or other professional to determine what may be best for your individual needs and risk tolerance. We encourage you to do your own research before making any investment decisions. Investing involves risks, including possible loss of principal.