Perceptions of current conditions continue to strengthen, Some Canadian investment real estate executives express concern over weak fundamentals

TORONTO - The Real Property Association of Canada (REALpac) and FPL Advisory Group announced the results from the Second Quarter 2010 REALpac / FPL Canadian Real Estate Sentiment Survey. The survey is the industry's most comprehensive measure of senior executives' confidence in the Canadian commercial real estate industry. This quarter, the survey captured the thoughts of 40 senior real estate executives, including CEOs, presidents, board members, and other executives from a broad set of industry sectors including owners & asset managers, financial services providers, and operators & related service providers. The quarterly survey measures executives' current and future outlook on three topics including (1) overall real estate conditions, (2) access to capital markets, and (3) real estate asset pricing. Survey respondents represent the retail, office, industrial, hotel, multi-family, residential, and seniors residential asset classes.

Topline Findings

Current conditions continue to strengthen. On the other hand, future expectations are dimishing, resulting in the overall index being flat. As one respondent indicated, "I'm grateful that Canada has had a stable, restrained banking system over the years that didn't make the big mistakes that the U.S. made", while another said, "We appear to be almost on par with the best times of '06 to '07." Expectations for the future, while still high, have begun to moderate as some express concern about continued weakness in fundamentals. One respondent noted that "We've had a pricing recovery, but things can't really improve until we get employment growth; that's the elephant in the room right now." An overwhelming majority see asset values on a positive trajectory, largely due to capital availability. Responses reflect strong improvement in debt capital availability, though future expectations are moderating. "There is a lot of capital available because of low interest rates; everyone has money and is looking for yield", said a survey respondent. Perspectives on equity markets continue to strengthen, with current conditions up again and future expectations moderating.

To download a copy of the survey report, go to http://www.realpac.ca/canadian-real-estate-sentiment-survey/.