Canada’s considerable aces in the hole remain its robust banking system, a fiscally sound government, rich stores of natural resources and commodities, and steady immigration, according to the Emerging Trends Americas report. “If not for what’s happening elsewhere in the world, Canada would be on fire,” said one respondent. “It makes a big difference when the government is not broke.”

Following are the top five Canadian markets, as ranked by survey respondents for Emerging Trends Americas:

Toronto. Canada’s preeminent global gateway dominates the country’s business landscape, concentrating financial services and industrial activity. The bulk of immigration heads to Toronto. In a “close to bulletproof” office market, rents have firmed just as the banking sector starts to pull back, putting a cap on office development. Institutions own 75 percent of downtown buildings, which keeps vacancies low. About half the nation’s industrial space is in the Greater Toronto area; high land costs will restrain new industrial building and help tighten vacancies. Despite more than a decade of seemingly nonstop high-rise residential construction concentrated in the city’s core, relentless renter demand from immigration and in-migration from within Canada absorbs about 40,000 units annually, keeping inventories low.

 

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Vancouver. The city experiences ongoing real estate price spikes precipitated by a surge of Asian capital flooding into residential markets. Buyers from China and other Pacific Rim nations pay millions of dollars for penthouses in new high-rise projects, which have taken over the city core. Any change in China’s political environment could mean slippage, or at least leveling off in what some deem an overpriced condo market. Commercial trade, regional commodity markets, energy companies, and financial services all expand, firming up occupancy rates and rents.

Calgary. Canada’s hot growth mecca, driven almost entirely by demand for oil and natural gas, can boom and bust suddenly. Locals were closely watching the United States for a decision on the oil-sands pipeline that would run through Alberta, and which, if approved could rev up the real estate market to another level. Local leaders are taking steps to densify the downtown and discourage unfettered suburban expansion. Mass-transit development gets into gear, and condo projects begin to form more of a residential footprint in and around downtown.

 

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Edmonton. Another oil-sands market, and the gateway to the Northwest Territories, Edmonton quietly prospers in less of a seesaw mode than Calgary, cushioned by the presence of the provincial government. Construction costs, notably for labor, are escalating for 2012. Commercial development activity remains relatively restrained, and local leaders aim to push residential construction closer to the city core. The industrial market tightens to almost microscopic vacancies, while the retail and homebuilding sectors both do extremely well, thanks to ample salaries in the oil-sands industry.


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High commercial occupancies and steady rents generate reliable, decent yields with the opportunity for mild growth. New product rarely trades, and landlords cannot find a more creditworthy tenant than the federal government, which leases most of the market’s space. New laws mandate green measures and access for the handicapped in government-occupied properties, requiring renovations for older buildings to stay competitive. Residential development features high-rise construction, and population growth concentrates within urban boundaries.

See, Real Estate Investment Prospects Around the Globe

ULI-the Urban Land Institute