The Toronto skyline as seen from Lake Ontario.Peter Power/The Globe and Mail
Toronto is now one of the Top 20 targets for global commercial real estate investors, but Canada remains a distant seventh when it comes to total foreign investment.
Cushman & Wakefield's International Investment Atlas Summary 2011 indicates the Ontario city attracted about $4-billion in foreign investment last year, putting it in 13th place on a list of 20 cities. That's similar to the amounts invested in Chicago, Sydney, Moscow, Shanghai and Stockholm.
It's a long way from world leader London ($21.1-billion), Tokyo ($15.6-billion) or New York New York which saw a near doubling in volumes to $11.8-billion to reclaim third spot from Paris.
"London in particular is benefiting from its growing status as of the safest haven of the global market, with strong interest from a still growing range of buyers from all corners of the world," the report states.
"What is more, while the city has traditionally been one of the first ports of call for investors looking at Europe, in this cycle it has also enjoyed an earlier occupational market recovery and further good rental performance lies ahead."
London has been a target for Canadian investors, and Oxford Properties in particular. The company hopes to spend upwards of $2-billion on new developments in London as part of its global diversification plan under new chief executive officer Blake Hutcheson. North American investment volume improved by 127 per cent last year over 2009, the report states, with the hospitality and residential markets coming back soonest.
"The Canadian market recovered well in 2010, with investment up nearly 150 per cent, yields falling over 50 basis points and rents stabilizing and increasing in some segments as occupier demand firmed and employment regained the ground lost in the recession," the report states.
"Strong levels of investor demand meanwhile have been met by a mild increase in supply, although a lot of Canada's big investors are continuing to look abroad to access a greater pool of investment opportunities."
Real estate companies such as RioCan REIT and Brookfield Asset Management are opting to spend a large percentage of their investment money outside of the country, where real estate is still trading at a recessionary discount that isn't present in Canada.
The Chinese market attracted the most attention last year, with investment nearing $200-million.
"While debt is less important in the Asian property market generally, conditions in the credit market have clearly relaxed further and spreads are back to pre-crisis levels," the report states.
"Investment will remain focused on the more established centres such as Hong Kong, Singapore, Shanghai, Tokyo and Sydney and these markets could see a further increase in investment activity as higher prices attract vendors to the market."