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CA ICI executives bullish but cautious

Property Here - Friday, May 24, 2013

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Canadian real estate executives are bullish about their prospects for the coming year but a few unknowns, such as continued low U.S. interest rates and the level of demand for Canadian products and resources, are cause for caution, says a report by Ferguson Partners.

“Last year, the Canadian real estate market did enviably well because of the country’s fiscal conservatism and close-knit professional real estate community,” says William J. Ferguson, author of the report and co-chairman and co-CEO of Ferguson Partners. “This year, it seems as though executives have one foot on the gas and one on the brake. On one hand, they’re optimistic about the increasing institutionalization of real estate investors, with capital-rich pension funds and REITs making a bigger imprint on the market. On the other hand, they’re not sure what will happen with global interest rates or demand for Canadian exports – both of which will have a large impact on real estate.”

Overall, a few common themes emerged from interviews with the CEOs, including:

* The role of institutional players – such as pension funds, REITs and other corporate organizations – is an overall positive development, adding capital to the market and creating competition.

* Macroeconomic factors continue to be an unknown. The CEOs cited several, including concern over future U.S. interest rates, which are closely tied to Canada’s, and global demand for products from Canada’s resource-rich economy.

* Leadership values in the Canadian real estate sector need to sustain their strength, to provide assurance to banks as lending tightens.