Americans have been nervous to get back into commercial investments, and for good reason. The crash hurt more than a few wallets and investors are afraid the growth we’re seeing now is doomed to fail yet again.
Americans have been nervous to get back into commercial investments, and for good reason. The crash hurt more than a few wallets and investors are afraid the growth we’re seeing now is doomed to fail yet again. Yet our neighbors above the 48th parallel aren't looking overseas for real estate investment opportunities, they’re just looking south of the border at key American markets that are ripe for the picking.
A Strong “Loonie” Promotes Investment Opportunities
When compared to the Canadian market, investment opportunities in America are much more tempting considering the strength of the Loonie. As recently reported by Business Week, the Canadian dollar is the strongest it’s been since February. The market is also much more competitive in Canada since they did not see such a harsh housing crash in 2007-08 which means that their strong Loonie goes farther in American investments where opportunities are generally cheaper and easier to find. This - paired with the fact that economies in other parts of the world, like Europe, are much more volatile - makes the USA market a great place for foreign investors to put their capital.
Canadian Investments and Multi-Family Units in Key Markets
There is strong involvement of Canadian investments across the board, but one particular area that has seen a high percentage has been in multi-family investments in areas that are primed for growth. Two of these major areas have been in California and Arizona. Both of these states receive a large number of immigrants which increases the demand for multi-family housing. Being able to scoop up US investment in areas that are showing growth in the multi-family sector means there is predictable cash flow and a greater likelihood of positive returns. Other key areas that have seen an influx of foreign capital have been Miami, San Antonio, and Las Vegas.
Is it a Lasting Trend?
Whether or not having Canadian investors having such a large piece of the pie will continue to be a trend remains to be seen. But it can be expected that as the US market improves and more capital is available to American investors (or they’re willing to invest their capital) that domestic investors will start to edge out foreign ones. However, it will also take time for Americans to be truly comfortable in their market again and until that shift happens, foreign investors may be the ones who are more willing to pull the trigger on commercial investments within the near future.
Where does that leave the US of A? Well pretty well off. More competition for commercial investments will only drive interest and more investments moving forward. For those that are nervous about the growth, they can sit back and watch what happens to the Canadian investors. But if they’re following these kinds of guidelines as outlined by Canadian citizen, Mat Piche, for investing in America (or any market) then the Canadian investors will probably be alright.
Peter Slaugh is the president of Steelhead Capital who provides both commercial loans and apartment loans to cater to the ever expanding market.