According to new research by CBRE, Canada remains the unrivaled global investor in U.S. real estate with nearly US$10 billion, or 26 per cent, in direct investments in 2014, ahead of Norway, China, Japan and Germany.
“Canadian investors find U.S. real estate attractive for many of the same reasons that other countries do,” said Ross Moore, CBRE’s director of research for Canada. “The U.S. offers opportunities for value creation, healthy cash flows and favorable risk-adjusted returns.”
And 2015 has been no different. As of mid-January, Canadian investors have already transacted a US$2.75 billion in U.S. real estate.
Canadian real estate investment in the U.S. was the third largest cross-border capital flows in the world in 2014, following the U.S.-to-United Kingdom and Hong Kong-to-China capital flow.
“The level of Canadian investment is highly correlated with the health of the American economy and exchange rates, but the overriding motivation is that Canadian institutional investors need to look beyond their borders to find product and achieve greater diversification,” added Moore.
For all property types combined, New York is the leading destination for Canadian real estate capital, followed by Boston and Broward County in Florida, which made the list due to a significant hotel acquisition.
Chris Ludeman, global president at CBRE Capital Markets, said: “While we have seen rapidly rising Chinese global investment and oil-rich countries in the Middle East or Norway increasing their allocations to global real estate, Canadian buyers continue to dominate foreign investment in the U.S. and should remain on the radar screens of American investors and owners of U.S. real estate.
“Canadians, other global investors and Americans share the same challenge: finding attractive opportunities with reasonable pricing that can produce a favorable risk-adjusted return. That said, we expect the investment climate to remain brisk and U.S. volumes will continue rising in 2015."
Look out for the February/March issue of Canadian Real Estate Wealth magazine, which will feature a full report on investing in the U.S. residential real estate market.
Agents with big-budgeted investor clients are wise to make some friends south of the border, as Canadians increasingly look to the U.S. for investment opportunities – despite the declining loonie.