Canada’s commercial-property market is less appealing than “recovering” areas such as the U.S. and Asia as investors compete for assets, said Sonny Kalsi, founder and partner of GreenOak Real Estate LP.
“Canada’s a little bit too competitive and a little bit too expensive,” Kalsi said today during a speech in Toronto hosted by Queen’s University. “The U.S. is in a recovery, though it’s a challenged recovery.”
The commercial real estate market in major Canadian cities is dominated by investments from retirement funds such as Canada Pension Plan Investment Board and firms including Brookfield Asset Management Inc. (BAM/A), as well as real estate investment trusts. GreenOak is focused on investing in office properties in the U.S. and Japan, and plans to add real estate assets in China, India and Europe in the next five years.
“Canada is a relatively small country, and within that there are only a few cities where people really want to be,” Kalsi, the former head of real estate for Morgan Stanley, said after the speech. “The country’s got a fair amount of capital -- private-sector capital, public-sector capital, so whether it’s Brookfield or CPP, there’s a lot of money here. It makes it that much harder for a foreigner to come in.”
Canada has also fared well with its REITs, Kalsi said in his presentation. Canadian REITs have outperformed their U.S. counterparts by almost 13 percent on average since January 2008, he said.
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