While some have forecasted a bland year for real estate in 2015, others are anticipating an exciting one. With global capital flows, cross-border investing, low interest rates and millennials fueling a buying boom, Canada continues to stand out as a great global destination for commercial real estate investing. However, there is still plenty of uncertainty over which cities will post the best gains. With the information we currently have, these are aspects investors should look for this year.
If there is one factor that Canadian investors can’t afford to prioritize in 2015, it is securing professional property management. The potential of an investment is only unlocked by great management. Seek out a veteran team with a proven track record.
This year will be the year to take advantage of strong leverage. Partnerships with other accredited investors can be a very smart move this year and will allow Canadians to expand their portfolios safely. Low interest rates can’t be ignored and ought to be capitalized upon as well. Combining both of these forms of leverage could prove to be extremely powerful and can afford investors a great opportunity to scale during this optimal time.
While most expect oil prices to return to normal before long, industrial properties will probably be less attractive than other commercial real estate sectors in 2015, until confidence returns. Office may remain strong and is normally a favorite with foreign commercial property investors. Multifamily and retail are likely to remain among the most trendy and desirable property types in the short and mid-term.
Until real clarity comes to the market and the media realizes that constant scaremongering filler content is bad for their organizations too (even if it bumps up short term ratings), the best strategies still rely on diversification. The more diversified investors are in geographic location, property type, number of and type of tenants, the better their overall performance should be.
Like Warren Buffett, investing for income and cash flow appears to be the favourite strategy and priority for 2015. Prioritize income and cash flow, desire value, prefer tax liability reducing structures, and price fluctuations won’t be a factor that should make investors nervous, or self-sabotage with rash moves.