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Canadian real estate investors were among the most active in the world in the first quarter, according to a study into capital flows from international brokerage Jones Lang LaSalle.

The brokerage said cross-border, direct real estate investments increased by 25 per cent from a year earlier, with $37-billion worth of deals. The most active buyers were global funds, followed by investors in Canada and Singapore.

The report, which did not break out numbers for each country, said commodity-rich countries such as Canada will likely be active buyers in the coming years. There was a good example last week, when the Canada Pension Plan Investment Board spent $700-million to buy shopping malls in the United States and Germany.

"A rapidly growing share of the global commercial real estate investment market belongs to the high-growth emerging markets and to commodity-rich countries like Canada. Improving transparency and solid economic prospects will only add to this trend," the report said.

There were no Canadian cities on the top 10 list of investor-friendly cities: Tokyo, Singapore, Hong Kong, Seoul, Shanghai, New York, Washington, Los Angeles, London and Manchester.

Most of the money went to the United States at $2.6-billion, followed by Europe with an inflow of $2.2-billion. There was a net outflow of money from Asia, at $3.3-billion.

"Looking ahead, Tokyo's market will unavoidably be affected by March's natural disasters. Investors are requesting updated engineering reports and this will delay some acquisitions, though domestic and global investors tell us they are committed to the market medium term," said Paul Guest, head of global research at Jones Lang LaSalle.

Offices are the most popular investment at almost 45 per cent of all deals, followed by retail space. Retail is expected to catch up in coming quarters.

"The evolution of retail investment will likely reflect the broader market with a shift in composition towards large developing markets, which are short of prime retail product, and away from core markets with high levels of retail provision," the report states.

The report said the pace of recovery in the sector has been better than expected, with investment activity growing faster than the economy because of low interest rates in the United States and Europe.

"It is likely that we will continue to move ... toward the 2006-2007 peak levels of volume in the range of $700-billion to $800-billion ...," the report said. "It is a different batch of commercial property which will be trading hands. New product in China, India, Brazil, Turkey and Russia, will gain in importance. In particular, retail in the big emerging markets will grow more rapidly than the overall investment market."

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