Most Canadian commercial real estate investors are expecting more available capital and transactions over the next year, says a new Altus Group report.

Investors’ capital-availability expectations have risen since the fourth quarter of 2023, says the Toronto-based firm’s quarterly sentiment report. But investors still expect a low overall amount of available capital.

Most investors (80%) plan to complete acquisitions, dispositions or both during the next year.

The report comes as the Bank of Canada is expected to start cutting its key overnight interest rate this year following a series of dramatic increases and holds.

Commercial real estate professionals anticipate that debt funds and banks will provide most of the capital with 32% and 27% of respondents expecting that money to be “extremely” or “very” available, respectively.

Investors expect more capital than previously to come from private individuals and family offices, private-equity and hedge funds. REITs and asset managers are still expected to provide the least amount of capital, but investors expect those groups are expected to be more willing to supply funds than they were in the previous quarter.

Canadian investors’ expectations of bank capital availability differ from U.S. counterparts’ predictions, according to Altus.

The group’s U.S. sentiment report shows that few American investors expect banks to return to the commercial real estate lending market during the next year. Most U.S. investors expect bank capital to be “not at all” or “not very” available in 2024.

Meanwhile, cost of capital remains top of mind among Canada investors, along with cost concerns, namely development expenses and inflation. Canadian investors are targeting modestly lower returns, of 10.8%, on their investments from a year earlier.

The Altus Canadian and U.S. sentiment reports were co-authored Omar Eltorai, the firm’s research director, and Cole Perry, a senior market analyst with the company.

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