Does Canadian Investment Abroad Lower Returns For Commercial Real Estate Investors At Home?

South of the border, recent headlines have been filled with stories of the huge surge in Canadians scooping up U.S. foreclosure properties. It is unclear whether this is the media grasping at straws to show some type of positivity in the housing market, or done out of disbelief that anyone is buying these properties. However, the real question to ask is how will this effect commercial real estate here at home in Canada?

While some may be concerned that investment in residential real estate in the U.S. is taking money out of the Canadian market, the truth is that it will likely mean great things for commercial real estate returns in cities such as Calgary and Edmonton, but why?

Canadians buying real estate in the United States are primarily doing it for investment purposes. Even those who want to use these homes for vacations will ultimately be leasing them for the rest of the year. This means that there will be positive cash flow coming back into the pockets of these investors, who will then spend it here at home throughout the rest of the year. This disposable income, combined with the attachment these individuals are developing for U.S. brands which are now available here at home, equates to an increase consumer spending. This spending will only continue to fuel retail growth, which will mean higher demand for retail space and better returns for those investing in commercial real estate in Canada.

There will unfortunately be a large number of Canadians who invest in foreclosure properties in parts of the U.S. which are being hyped by marketers, such as Phoenix, Arizona and parts of Atlanta, Georgia. They simply won’t live up to the promises. You have to respect the great marketing, but no matter how you paint them, some of these markets could likely be crippled for quite some time, until the economy is stabilized. This bad experience will have Canadians pulling out and telling those they know first-hand to keep their money here at home. Some will invest this cash in residential real estate, some will start new businesses, and much of it will go on luxury goods and increased spending on everyday items.

At the same time those unhappy with the economic conditions and lack of jobs in their own countries will increasingly seek to migrate to Canada, in search of jobs and to start businesses where people are spending money.

All of these signs point to continued security and increased returns for commercial real estate investors in Canada, specifically those focusing on the western provinces and forward thinking investors heading to destinations like Edmonton. Where you put your money is entirely up to you, but including shopping plazas in Alberta in your portfolio as we move into 2012 could be a great move.

Want to learn more about how you can profit from commercial real estate in Canada, or get more information on some of the great opportunities that are available? Contact Howard today by phone at 866-986-8673 or email him right now at howardm@redevgroup.ca.

Thank you for reading.

Richard Crenian
www.redevgroup.com