Calgary’s the best for Global Commercial Real Estate Investors

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Calgary was the best city for commercial real estate investors last year, according to a global survey by Investment Property Databank Ltd in which the top 10 locations were all in North America.

Rental income and higher property values in Calgary produced a return of 21.6 per cent, the London-based research firm said.

The Canadian city benefited from the booming oil and gas industries and a restricted supply of real estate, IPD said. Sydney and Cape Town, also dominated by commodity companies, generated returns of 9.9 per cent and 11.2 per cent.

“Real estate returns have been influenced by stabilising or improving income, recovery pricing and safety-seeking capital shifts,” said Bill Hughes, global head of real-estate research and strategy at UBS Global Asset Management, which oversees almost $580 billion (Dh2.1 trillion) of assets.

London had a 6 per cent gain in property values last year, the most in Europe, while New York real estate appreciated by 8.6 per cent.

The US and Canadian markets recovered from the global credit crisis about 12 months after Europe, IPD said. The survey excludes China and some other Asian countries.

“The financial centres of London and New York benefit from the quality of real estate and tenants as well as market transparency and liquidity," IPD senior director Peter Hobbs said in a statement.

Unsustainable returns

Nineteen cities, including Boston, Denver and Montreal, had returns of more than 12 per cent, the survey showed.

That level of returns is probably not sustainable because it was driven by investors seeking a haven for their money or to profit from a recovery in local property markets, Hughes said.

Dublin was the worst-performing market covered by the survey, producing a loss of 1.9 per cent.

An investment in the city returned 0.6 per cent during the past decade as rental income was almost completely erased by the collapse in real estate values, IPD said.

The best-performing cities of the past decade were Cape Town and Johannesburg, returning 19.4 per cent and 17.3 per cent, according to the survey.

 


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