2016 KPMG Real Estate Outlook Survey – A Canadian/US Comparison – May 2016 -Constance Hunter
via/kpmg.com
Investors have been optimistic about the US real estate market, and that looks to continue into 2016 and possibly beyond. Capital is flowing into the United States and the economy is growing, bringing knock-on effects that make real estate a good investment. And that was before the recent interest rate rise and tax changes that will only accelerate these trends. At the same time, however, investors are becoming more cautious about future prospects. They are becoming less aggressive in their risk-taking and more uncertain as to how the market will look when they exit these investments several years down the line.
In Canada, the overall trend for real estate is quite similar with a few significant differences. First, the dramatic drop in oil prices is having a significant, albeit uneven, impact on the economy. Some geographic areas are benefiting, or at least weathering the storm, while others are very much being adversely impacted. Second, the weakening of the Canadian dollar
has created a scenario where Canada is “on sale.” Foreign capital is flowing into Canada to take advantage of both opportunities to acquire real estate with a currency play should the Canadian dollar recover some of its lost strength. Lastly, while Canada is also considered a “safe haven” similar to the US, it continues to lag the US in terms of economic recovery due to several
factors including the relative significance of commodities on the Canadian economy.
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