Murmurs that the hot Canadian real estate market is heading for a correction have been stirring around media sources for a while now. But, despite all the background noise, the real estate market, both residential and commercial, in major Canadian hubs like Toronto, Vancouver and Calgary remains fairly bustling, with positive valuations and strong demand. Of course, this is not to say that the Canadian real estate market will continually enjoy high values, nor does it mean that the cyclical nature of real estate has somehow magically disappeared. It simply means that there is a tendency for some of us in real estate to bet against a market that shows little sign of cooling. This is a natural human reaction and I think it’s important to step back occasionally and understand that those who are cautious and even pessimistic – i.e. those who are counting the days when the bubble will burst – play a part in the greater investment picture.
Here’s the thing – if the real estate market continues to produce clearly positive signs of growth and investment, then these positive signs should continue to be considered. For example, take a look at some of the recent, more newsworthy items coming out of Edmonton’s real estate market. Early in September, the city’s residential market enjoyed what I think is a clearly positive milestone. On September 5th, it was reported by the Edmonton Journal that a condo in Edmonton, in a new construction called Symphony Tower, sold for $2.625 million, a value that in fact broke the MLS record for the city. This is a significant milestone, not simply because of the price that the condo unit sold for, but because it speaks of the continued high level of investment and development the city of Edmonton is enjoying. After all, this condominium is to be located in a completely brand-new development.
Willingness on the part of buyers to pay high values for real estate assets coupled with investors excited in the development opportunity of new constructions are two extremely positive points. Consider also the continued resurgence of Edmonton’s downtown area. Developers remain upbeat about their prospects for major commercial projects downtown, such as the Edmonton Arena District. Whether these proposed project plans actually come to fruition is a different story. But, once again, the important point is that these new development proposals speak to the fact that investor sentiment in the city, and indeed in many other areas of the country, remains positive.
ReDeV Properties Ltd, a commercial real estate management company that I formed in 2001, serves as a facilitator allowing individuals to invest in Canadian real estate assets. Forming ReDev and leading the company for the past nearly 15 years has reinforced in my mind what is essential for individual investors.
For an investor who is considering putting their assets toward a real estate property or, similarly, an investor who is considering investing their money with an asset management company like ReDeV Properties Ltd, I always caution that investment choice needs to be an individual one. More specifically, it needs to be based on two investing essentials: one, completing an adequate amount of due diligence, so that individuals really know and understand the kind of investments they are putting their money into. Second, investment decisions for individual investors have to come from what they feel comfortable with. Both of these are key guiding principles that in my opinion need to be on the mind of investors and should be regularly reinforced by those who facilitate investments for others.