| Foreign investors interested in buying investment | | | | properties will recover next year, growing at the annual |
| property may find enough support in the economic | | | | rate of 1.7 per cent. This increase will take place |
| fundamentals and market developments this year to | | | | amidst mild deflation in general consumer goods and |
| justify their investment decision. The outlook for | | | | services worldwide. Therefore, any increase in |
| investment in real estate looks promising, especially for | | | | Canadian home prices in an environment in which |
| investors from abroad interested in buying investment | | | | prices of consumer goods and services are declining |
| property in Canada. This outlook, however, compares | | | | will magnify real returns on investment in residential |
| to a grim state of the global economy and the | | | | properties. This should make buying investment |
| property markets around the world, which makes | | | | property in Canada attractive, especially for buyers |
| buying investment property in Canada more favorable | | | | from overseas locations that have poor real estate |
| than purchasing stocks and bonds or buying | | | | investment prospects. Moreover, this is more so given |
| investment property abroad. | | | | that market conditions are not in favor of buying |
| Indeed, this year has brought some relief to the stock | | | | investment property abroad. |
| market investors. Bonds and other types of fixed | | | | Opportunities also exist in certain types for investment |
| income securities have seen solid gains as well. | | | | in commercial real estate. Generally, investments in |
| However, a closer look at the global economic and | | | | commercial real estate are currently more attractive |
| financial conditions suggests that it seems more likely | | | | than stocks, given that returns on commercial real |
| that the emerging consumer deflation and continued | | | | estate are insulated from market volatility. The returns |
| deterioration in credit markets throughout the world will | | | | that investments in commercial real estate yield are |
| prompt global investors to allocate their investments | | | | based on fixed long-term leases that generate stable |
| into conservative, liquid assets. Therefore, this may be | | | | income flows. In Canada, vacancies on almost all |
| the right time to invest in attractive real estate so as to | | | | classes of commercial real estate have been |
| take advantage of undervalued properties and | | | | increasing at a slow pace, bucking the global trend of |
| historically low interest rates. Many property | | | | apartment, office, industrial, and retail vacancies that |
| investment opportunities may exactly be located in | | | | have jumped stridently to all time highs. Moreover, |
| Canada’s real estate market. | | | | prices of commercial properties have fared quite well, |
| In most world economies, a rebound in the stock | | | | especially when compared to commercial real estate |
| market and fixed income securities has come against | | | | abroad, such as the United States. Hence, Canadian |
| an extended slump in both residential and commercial | | | | commercial properties in the areas that have a |
| real estate markets. Some may assume that large | | | | perspective for long-term employment and income |
| corrections in stock prices over the past several years | | | | growth represent a good opportunity for buying |
| make equities a good buying opportunity now. This | | | | investment property in Canada with strong earnings |
| may be true of some equities, but, in general, the | | | | potential. Given the dire state of the global real estate |
| market conditions are not favoring equity investments. | | | | markets, this may especially hold true for investors |
| Given that modest deflation is the most likely outcome | | | | from abroad interested in buying investment property |
| for the near future, it may be expected that stocks will | | | | in Canada. |
| perform poorly as deflation cuts into corporate bottom | | | | The current global investment conditions suggest that |
| lines and slashes expectations of future growth in | | | | investors should steer away from equities and bonds. |
| earnings. Moreover, deflation increases the cost of | | | | Instead, they should focus on opportunities that will |
| financing for businesses and governments, thereby | | | | protect their investments in a deflationary environment. |
| increasing the risk of default on corporate or | | | | Given that Canadian real property market promises |
| government bonds. Therefore, neither stocks nor | | | | positive returns in the coming year, investors from |
| bonds are likely to provide satisfactory returns over | | | | abroad should try to capitalize on quality real estate |
| the medium term. | | | | investments by buying investment property in Canada. |
| But, does the same apply to real estate investments? | | | | Those with readily available finance and courage to |
| And, specifically, why are real property investments in | | | | invest in real estate the current environment have a |
| Canada attractive now? Home prices in Canada have | | | | potential to realize substantial returns over the medium- |
| been declining at a modest pace this year. According | | | | and long-term periods. |
| to most estimates, prices of Canada’s residential | | | | |