Saskatchewan landlords and investors have faith in the province’s long-term commercial real estate potential, despite two years of declining asset values.
A new survey conducted by Colliers International polled 200 investors on their property holdings in Saskatchewan. The results demonstrated a majority interest in acquiring more assets into the New Year, regardless of the province’s oil recession affecting prices and demand.
Fifty-seven percent of investors say they are somewhat confident in the province’s short-term economic prospects. The relative optimism translates to 67 per cent of respondents planning to add more properties to their portfolio.
“Investors remain bullish on Saskatchewan and are willing to pursue additional risk if the right opportunity arises,” the report states.
None of the investors polled would expect to spend more for assets in 2017, with 71 percent anticipating spending less and 29 per cent expecting prices to stay the same. Capitalization rates have decreased in every sector except for industrial.
Although the commercial market is not overwhelmingly landlord-friendly, very few investors are looking to sell off their multi-family assets. Seventy per cent of investors would not reduce their portfolio in any sector.
Moving forward, the majority of buyers are looking to acquire retail assets to expand their portfolios. The retail sector is currently experiencing the lowest vacancy rates in the Saskatchewan commercial market and the most stable rental profits, Colliers reports. Investors’ current portfolios consist primarily of multi-family and industrial properties. The least amount of investors presently own retail assets.
The majority of buyers hold portfolios valued at over $100 million and 86 per cent are private investors.