Canada's CRE Transactions Dipped to $50.8b in 2023

International buyers accounted for over half the largest commercial real estate sales: Altus Group

Overall commercial real estate investment in Canada was down by 35% in 2023 versus 2022, the most significant percentage drop since the first year of the pandemic, according to data from Altus Group. Transactions declined from $79 billion in 2022 to $50.8 billion in 2023, according to Altus’ most recent figures.

The slowdown in activity was largely due to higher interest rates, uncertainty about the economy and a growing bid-ask separation between buyers and sellers, says Raymond Wong, vice-president, data solutions at Altus. However, the attractiveness of the Canadian market grew to foreign buyers, with foreign investments by dollar value representing just over 50% of the Top-30 Canadian transactions in 2023. Indeed, the top three transactions in 2023 by dollar volume all involved foreign buyers.

Canada has always been seen as a safe haven for foreign dollars, especially with our population growth based on immigration over the last few years

Raymond Wong, Vice-President, Data Solutions, Altus Group 

Given the reduced number of buyers in the market, it was a good opportunity for some investors to make a move, he adds. While industrial and multi-residential real estate remains strong with investors because rents in the asset classes continue to rise, several of the top transactions in Canada in 2023 involved retail properties with most being in the GTA and in Ontario’s Greater Golden Horseshoe area.

As for a 2024 forecast, Wong expects a slow start in the number of transactions until interest rates begin to drop. Activity should increase by mid-year as long as rates start to come down, but “I don’t think we are going to reach the $79 billion we reached in 2022.