Alberta real estate investment decelerates significantly this year

Amid a steady pace of economic recovery, Alberta is seeing a considerable slowdown in its commercial real estate investment volumes, according to latest Altus Group data covering Q2 2019.

In Edmonton, investment levels during the first half was markedly below last year’s output. While nearly $419 million in commercial transactions took place, bringing the year-to-date total to $1.1 billion, this was actually a dramatic annual decline of 62% from the second quarter of 2018.

Q2 2019 was also the third straight quarter of decline for the city’s property investment segment. Apartments accounted for 31% of that quarter’s transactions, while industrial assets represented 19%. Offices held a mere 2.1% of the city’s total Q2 investment.

“While the market has experienced declining investment volumes since mid-2018, the apartment and industrial sectors continue to be the preferred asset classes, providing reasonable returns while servicing a continued demand from users” Altus Group data solutions manager Ben Tatterton stated.

In Calgary, total investment volume for the first half of 2019 was $1.2 billion. Around $426 million came from Q2 2019, representing a massive 56% drop from the same quarter in 2018.

However, “while the second quarter results showed a steep decline in sales volume from the same quarter last year, it’s also noted that the investment totals for the market were only down by 26% year-to-date compared to 2018,” Tatterton said.

“It appears that the market continues to remain in a holding pattern as we move into the second half of the year.”

The apartment sector saw 54% year-over-year growth, up to $84 million in transactions. This segment, as well as the industrial market, each accounted for 20% of Calgary’s Q2 total investment volume.

Meanwhile, the residential and ICI land markets both registered 16% of the second-quarter performance. The office sector represented only 10%, just a bit higher than the hotel sector.