Greater Edmonton investment review

With recent interest rate drops, the availability of capital has increased, leading to a rise in buyer interest. However, bridging the bid-ask spread between buyers' and sellers' expectations has proven challenging.

 

Investment market trends

 

01. Interest rate declines signal future investment growth

Despite the Bank of Canada’s many interest rate cuts since June, a bid-ask spread remains between buyers and sellers. Many potential buyers have considerable capital available to deploy but are still waiting for rates to decline further. Ongoing decreases in interest rates are expected to result in more investment activity in coming quarters.

Along with the expectation of further rate decreases in the near term, other factors holding back investment volume include volatility in bond yields – rendering financing costs more difficult to predict and model – and uncertainty around the longer-term impacts of the recent U.S. election result on inflation and interest rates.
 

02. Judicial sales on the rise

Judicial sales volumes across the GEA have substantially increased from 2023, with 19 properties totaling $127.9 million transacted through the first three quarters of 2024. This marks a 128% increase in dollar volume and a 28% rise in the number of transactions compared to 2023’s full-year total of $55.9 million across 15 transactions.

Despite challenging market conditions and an uptick in distressed-asset sales volume, judicial sales have remained relatively scarce (accounting for only 3.5% of the number of transactions and 4.9% of dollar volume through the first three quarters of the year).

 

03. Private buyers step up as institutional confidence builds

Institutional investors have exhibited a heightened aversion to risk in the current market, driven by economic uncertainty and interest rate volatility. This cautious stance has kept many on the sidelines, creating opportunities for private buyers to step in and capture market share.

However, as market conditions stabilize and the 5-year bond yield shows signs of reduced volatility, confidence among institutional groups is beginning to rebuild. Should this trend continue, it is likely to encourage institutional capital back into the market, boosting competition and liquidity across asset classes.