While so much of the discussion surrounding Canada’s construction sector involves housing, and the never-ending debate about a housing bubble, the word construction literally involves more than just housing. It also includes Canada’s commercial real-estate sector, which adds a dimension to ongoing debate that is often overlooked.
Specifically, Canadian commercial real estate is doing extremely well, and is predicted to remain strong well into 2018. So, while so many people seem to be worried about a “housing bubble,” they overlook the fact that another major component of the construction sector, as well as the Canadian economy, is providing some stability to the system.
An ongoing growth sector
According to a review performed by commercial real-estate firm Avison Young, Canada’s continuing strong economic fundamentals are fuelling ongoing investment in Canada’s commercial real-estate sector, especially in Toronto and Vancouver. Both domestic and foreign investors are behind the growth, which also includes investment in Canada’s other major markets.
In fact, in Canada’s six major markets, according to the review, 2016 saw a record $28.4 billion in commercial real-estate investment sales, which has been followed by almost $19 billion of investment in the first half of 2017 — a 29-percent increase from the previous year.
Since many of these deals are financed by mortgages, this continued growth in commercial real-estate investment bodes well for commercial real-estate mortgages, too, which has also experienced strength in recent years, in part fuelled by tight lending policies by the big banks, which probably won’t change soon, given the current political climate surrounding the ever-present “bubble.”
Attractive mortgage opportunities
The fact is that investment in Canadian commercial mortgages has certainly evolved over the years, to the point where investors have numerous options at their disposal. From pooled and mutual funds, to mortgage investment corporations, commercial mortgage investments provide alternative opportunities for those seeking better returns with manageable risk.
So, next time you hear someone talk about the imminent collapse of the “housing bubble,” tell them there’s another side of the story, a positive one involving Canada’s commercial real-estate sector.
ASCEND MIC is a mortgage investment corporation, with offices in Toronto and Richmond Hill, that specializes in various aspects of mortgage investing, lending, administration and more.