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Alternative Market Briefing

Despite the COVID-19 crisis, Canada-based investors stick with real estate

Wednesday, October 28, 2020

Laxman Pai, Opalesque Asia:

As 2020 draws to a close, it is difficult to assess the longer-term impact of the COVID-19 crisis on the Canadian private real estate market.

Preqin data suggests the asset class has been hit hard this year, with only three funds closed so far, raising an aggregate $600m, down from $16bn last year. But on the other hand, the proportion of Canada-based investors looking to invest in real estate in the next 12 months has increased by 13 percentage points compared to this time last year.

For now, at least, investors remain committed to the asset class, it said.

"Underlying this strong appetite, the data also shows us that investment patterns have shifted in the past five years," Preqin said.

Traditionally, public and private pension funds are the main investors in the Canadian real estate space, but since 2015 family offices have expanded their market share from 8% to 14%. According to the study, investors are extending their reach beyond Canadian property.

Looking ahead, two-thirds of the Canadian workforce predict that working from home will become the 'new normal,' with employees at major firms such as Royal Bank of Canada and Toronto-Dominion Bank mandated to work from home until 20213.

Should businesses look to downsize and use office space more flexibly and efficiently, the Canadian private real estate landscape could evolve significantly over the longer term, said Preqin.

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