Canada’s favorite alternative investment? Real estate

Real estate was favored over infrastructure, private equity, private debt and hedge funds

Jun.June 23, 2019 02:00 PM
(Credit: iStock)

(Credit: iStock)

Institutional investors in Canada are prioritizing North American real estate over other alternative investment options despite some reservations about financial performance.

CIBC Mellon, headquartered in Toronto, commissioned a study to find out more about how institutional investors in Canada were thinking about alternative investments.

The report, titled “Race for Assets: Canada vs. the World,” showed that 42 percent of respondents favored real estate for alternative investment. However, the performance of real-estate investments ranked worse than infrastructure, private equity, private debt and hedge funds.

“The biggest takeaway is that, of all the respondents we had, none indicated that they’re going to decrease allocations to alternatives,” Jon Lofto, director of alternatives at CIBC Mellon, told Real Estate News Exchange.

In fact, the study showed that 92 percent of respondents favored increasing their exposure to North American real estate over other regions.

“The predominance of real estate can be attributed to strongly rising property markets globally since the global financial crisis,” the report stated. “Nowhere has this been more evident than in Canada itself: Real estate prices nationally increased by over 44 percent in the five years to November 2018, according to the Canadian Real Estate Association.” [RENX] — Sylvia Varnham O’Regan

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