Canadian institutions: Real estate is the ‘alternative’ of choice

June 26, 2019 | Real Estate
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A CIBC-Mellon study found that 42% of institutions prefer real estate as an alternative investment

Even as their appetite for alternative investments is growing, Canadian institutional investors are increasingly partial to the real estate category, a CIBC Mellon study revealed.

While 42% of the surveyed institutions eyed real estate, 20% preferred infrastructure, the study found. Private equity (18.7%) and private debt (17.9%) were also popular.

Alternatives: the lure of higher returns and lower risks

Canadian institutions are looking to shelter from short term market volatility and risk, while generating better returns on capital, according to CIBC Mellon director (alternatives) Jon Lofto.

In addition, Canadian investors are becoming more sophisticated in their strategic investment decision-making process. According to Mr Lofto, investors are looking to advanced analytics and big data as inputs to enhance investment decisions. As well, they are considering environmental, social and governance (ESG) factors while investing.

The ‘go-to’ real estate destinations in Canada

Montreal is highly sought-after given its well-developed tech scene and four top-rated universities.

Toronto is also drawing investment interest in view of the 19% growth in the city’s home sales during the month of May. The Greater Toronto Area (GTA) is a magnet for property investment given the growth in population due to immigration and job opportunities available across a wide swath of business sectors.

 

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