Montreal’s Diverse Economy Appeals to Investors

By Tracey Arial

Montreal’s size appeals to pension funds that have seen their real estate allocations going up, says Armand Des Rosiers, one of Montreal’s key real estate experts.

“People understand that Montreal, being the second largest metropolitan area in the country, is a large market,” said Des Rosiers, who directs RBC Capital Markets Real Estate Group. “Investors are very sophisticated and they understand how our economy works. They see that our economy is diversified. Investments over the years in Montreal have produced the expected returns. Montreal is looked on favourably by investors across the country.”

Montreal’s real estate market has benefited most from active development projects by pension funds that have teamed up with private developers to offer opportunities for buyers, said Des Rosiers.

“There has been a lot of retail development around Montreal and that has created opportunity for investors. I see that continuing.”

At the same time, there’s a big difference between top tier assets, which sell quickly at premium prices and B-assets that generate higher capitalization rates and move more slowly, if at all.

“Most investors have ample liquidity and are looking to acquire properties that produce quality cash flow, but they’re very discriminating,” said Des Rosiers.

The most appealing projects right now are those in which people are creative about finding alternative uses for properties, especially in the less-risky asset classes, such as multi-residential, retail and some office.

“We’ve been selling some office and some industrial and people are finding upsides in those markets,” he said. “I think now people look at properties and they see alternative uses for these properties. You are seeing many office buildings being converted to residential use.”

Note: This article appeared on page 27 of the Spring 2014 issue of Canadian Real Estate Magazine.

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