Strong performance in Canadian real estate continues
Investment in Canadian commercial real estate delivered the strongest performance since 2006, as measured by the REALpac / IPD Canada Annual Property Index.
The annual total return of 15.9 per cent was up significantly relative to 2010 (11.2 per cent) and 2009 (-0.3 per cent). Looking at the 12 year history of the REALpac / IPD Canada Annual Property Index, 2011 was the third highest annual total return ever.
Total annual returns for the three years, five years, and 10 years ending December, 2011 remain robust at 8.7 per cent, 9.0 per cent and 11.2 per cent respectively.
Examining the three major property sectors, office registered the highest increase in total return in 2011 (16.3 per cent) from 2010 (8.5 per cent). Also increasing significantly in 2011 was industrials (12.8 per cent) versus 2010 (8.7 per cent). Finally, retail continued its strong performance in 2011 (16.8 per cent) and 2010 (15.6 per cent).
Overall, the six largest commercial property markets generated healthy total returns in 2011. Of the six largest markets, Calgary (21.6 per cent) and Edmonton (13.9 per cent) had the greatest increase in total returns relative to 2010. Vancouver (15.1 per cent), Montréal (15.0 per cent), Toronto (14.9 per cent) and Ottawa (12.8 per cent) also grew in value relative to 2010.
The 1-year performance of direct property investment (15.9 per cent) exceeded the return of the REIT market (15.1 per cent), equities (-10.0 per cent), bonds (12.8 per cent) and inflation (2.3 per cent). REIT market data is based on the FTSE EPRA/NAREIT Index for Canada. Equities are based on the MSCI Canada Index. Bonds are based on the JP Morgan 7-10 Year Government Bond Index. Inflation is based on data from Statistics Canada.
The REALpac / IPD Canada Annual Property Index measured over 2,100 institutional grade properties across Canada valued at $95.2 billion CAD at the end of 2011.