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Brexit and Canada’s CRE Market: What May Lie Ahead

by John Brydon-Harris on October 3rd, 2016

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After the UK voted to leave the European Union this past summer, an endless slew of questions arose about how the decision would affect employment, the economy, travel, and culture – not only in Europe, but also around the world.

In the past few months, questions in Canada have focused on real estate; experts wonder whether the referendum decision will drive up Canadian Real Estate (CRE) prices. Why? The continuing state of uncertainty has investors from Britain, other European countries, and Asia looking to channel their investments to the more certain North American markets.

Pierre Pequegnat, a Canadian mortgage expert and university professor, published the following, post-referendum: “As Brexit and economic concerns have heightened short and long-term uncertainty, investors are now more likely to maintain above average interest in North American markets relative to Asia, the EU, the UK and the emerging market.”

However, in an article in Canadian Property Management, Chris Langstaff, senior vice president of research and strategy with LaSalle Investment Management, disagreed.

“Canada has long been viewed as a safe haven by foreign investors, but, at the same time, many are aware of the strong depth of institutional ownership here that tends to dominate and hold the best assets for the long term,” Langstaff said. “If the shine has worn off the UK for the time being, it could make other markets around the world more appealing, but I’m not sure that will drive a lot more capital towards Canada.”

Seems the only certainty about the effects of Brexit is its uncertainty.

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