The global real estate market has undergone great upheaval due to the pandemic, yet several cities have ridden the waves and shown themselves to be promising or stable investments, despite the choppy waters. Below are some of the top places for investment in Canada, USA, and around the world, as anticipated by global pundits.
Top Canadian Cities for Investment
- Vancouver, BC
- Toronto, ON
- Montreal, QC
- Calgary, AB
According to PwC Canada’s “Canadian real estate markets to watch in 2022,” the most auspicious cities were (predictably) Vancouver, Toronto, and Montreal; the report also indicated “renewed optimism” for Calgary. As the chart-topper, Vancouver’s capital strength is supported by intergenerational wealth, a low unemployment rate, and a healthy amount of market competition. Toronto (and the Greater Toronto Area) also has vital industrial and residential markets, although affordability and availability are still pressing issues. In Montreal, government incentives for “developing rental properties and affordable housing” — plus an expanding transit network — are welcoming gestures for investors. Calgary also shows promise as the economy diversifies, the population grows, and the housing market soars.
Top American Cities for Investment
- New York, NY
- San Francisco, CA
- Boise, ID
- Austin, TX
Investors in all markets continue to clamour for properties in major states like New York and California. According to fDi Intelligence’s ranking of “Americas Cities of the Future 2021/2022,” New York City ranked at the top of the categories of “Economic Potential” and “Business Friendliness,” taking a lion’s share of 10 per cent of foreign direct investment projects within the entire country in 2021. Sunny Silicon Valley continues to draw steady interest from investors in software and IT sectors.
However, in an article titled “The Best Markets for Real Estate Investment In 2022,” Forbes noted a shift in the residential market from purchasing to renting as unemployment soared, income shrank, and people fled urban areas during the pandemic. With this trend in mind, places with high home prices and low rent averages — such as Boise, Idaho — offer an encouraging yield for those looking to invest in apartment buildings. The Association for International Real Estate Investors (AFIRE) also found a marked interest in tertiary cities — specifically Austin, Texas — from U.S.-based and non-U.S.-based investors.
Top International Cities for Investment
- London, UK
- Berlin, Germany
- Mexico City, Mexico
- Bogotá, Colombia
Despite Brexit, London still holds investor interest, and Berlin is a steady investment locale. Both markets remained relatively steady during the pandemic and are still among the top 10 cities in the world to invest in (as well as other European capitals like Paris, France), according to Halo Financial, a U.K.-based foreign exchange service.
Returning to fDi’s 2021/2022 rankings, Mexico City and Bogotá placed first and second in “Latin American Cities of the Future.” Mexico City was also included in the top “10 Major American Cities in the Economic Potential” category and consistently grows in innovation. A prime example of an infusion of interest in the metropolis was Netflix announcing it would move its headquarters from São Paulo, Brazil, to Mexico City in 2020.
Beyond focusing on major cities, it’s a good idea to zoom out and see the bigger picture on an international scale. Entire national economies and their global interplay should be taken into consideration. Halo Financial noted the top five countries for each category below:
Greatest Potential Growth
Countries with the highest potential return on investment include the United States, Brazil, China, Spain, and the United Kingdom.
Stability of Country
The United States, Germany, Canada, the United Kingdom, and Australia are anticipated to remain among the most stable markets in the world.
Brazil, China, India, Mexico, and Colombia are all burgeoning economies that are predicted to continue to grow in exciting ways (and worth investing in early).
Potential Negative Impacts
According to AFIRE’s extensive annual survey — “2021 AFIRE International Investor Survey Mid-Year Pulse Report” — which gathered data from 76 executives across 12 countries, many concerns come into consideration when looking for reasons not to invest.
The threat of local and global recessions was one; de-urbanization was another. The pandemic’s dampening effects on economies generally, and supply-chain shortages everywhere, were also major factors for construction and market demands. The movement towards work-from-home models also affected the need for office and retail space (although the market for residential and storage-use space grew in strength).
More specific aspects of geopolitics — like Brexit (U.K.), overseas conflicts (China and America), civil unrest (Hong Kong and Latin America) — and the effects of climate change on geography everywhere impacted crucial investment decisions. In fact, climate change was one of the most pressing concerns for investors, with 80 per cent of those surveyed indicating “some” or “great” concern towards it and 83 per cent anticipating environmental risks affecting potential real estate investments.
As with all investments, circumstances are always changing, and yields are speculative.
This article originally appeared in the summer 2022 issue.
Rose Ho | Assistant Editor