TORONTO — Investors have a strong appetite for investing in Canada’s real-estate market, according to a new Colliers International Hotels study. The study found 44 per cent of respondents are interested in buying as a primary investment strategy this year, the second-highest it’s been since the survey was conducted in 2010.
The findings were part of the sixth-annual Canadian Hotel Investment Sentiment Survey, which provides insight into the direction of the Canadian hotel real-estate market during the next 12 months. The survey was conducted in partnership with the Ted Rogers School of Hospitality and Tourism Management at Ryerson University.
When it comes to investment intentions in 2016, the survey found a growing number of investors are planning to build or buy hotels in primary urban markets, up from 40 per cent in 2013 to 54 per cent in 2015. Interest in primary suburban markets has slipped nine per cent in 2015.
More than half of investors indicated they plan to pursue hotel investments in Ontario and Quebec this year, followed by Western Canada (35 per cent). However, plans to invest in Western Canada during the next 12 months declined 10 per cent year-over-year.
Hotel assets in the 101- to 175-room range were reported as the ideal property size for acquisitions or new developments, while 42 per cent of investors identified limited-service properties as the preferred asset class, a 10-point leap year-over-year.
The majority of investors indicated they expect cap rates to remain stable through 2016 while 29 per cent expect cap rates to increase.
Sixty-two per cent of respondents are more concerned with the fundamentals of the Canadian economy than in recent years. Other concerns include the availability of credit (16 per cent); demand trends (16 per cent); other (23 per cent); the state of the U.S. economy (10 per cent); and the state of global markets (six per cent).
The complete “2016 Canadian Hotel Investment Report,” will be released in Q1 2016. More information on the report can be found here.