REALX: North American real estate avoids worst of Covid

(Top L to R) Rick Graf, Jim Costello, Bert van den Hoek, (Bottom) Amy Erixon, Richard Betts.

The US real estate market has weathered the Covid 19 storm better than some predictions had suggested and, according to Pinnacle president and CEO Rick Graf, the predicted “Covid discount” has not materialised.

“Today we are seeing many investors ramping up their deployment of capital this year and we saw a big uptick in underwriting in July,” Graf said during the REALX.Global Update North America, Cross-Border Investment Trends, Capital and Opportunities session yesterday.

He added that numbers, “are a little bit off but way better than I thought they would be”. New York has been the toughest market in which Pinnacle operates but most markets are close to normal with leasing activity ahead of where it was at the same point last year, he said.

Hard to get deals done with everybody locked up at home

Jim Costello, senior vice president, Real Capital Analytics said that cross-border investment into the US is reduced but not exceptionally so. “You look at the numbers and it is down, but it is not like it is down at a different pace than domestic investment. It is down overall. It’s just been hard to get any deals done since March with everybody locked up at home.”

Amy Erixon, president global investment management, Avison Young, Canada said that the US and Canadian markets are “trending comparably” and she added that the housing and industrial markets are “extraordinarily strong”.

Vancouver ‘off the charts’

However, she pointed out that in Canada there is also an East-West phenomenon with transaction volumes in Vancouver “off the charts”, largely attributable to Hong Kong money. The firm’s Vancouver apartment team did more than C$1.8bn of transactions in April alone she said. “So the fact that we were right in the middle of Covid basically had no impact on the velocity of money coming into that market.”

Erixon said both the US and Canadian markets are very transparent but it is, “very challenging knowing if you can get comfortable acquiring an asset in a country that you cannot travel to. Thankfully, the travel restrictions between most European destinations and Canada have lifted. But the US market looks as if it will be closed down for longer.”

Bert van den Hoek, senior portfolio manager North America, Bouwinvest North America explained that one of the priorities for his firm’s newly opened office in the US is to advance its affordable housing model in the US. He said one of his targets is millennials loaded with student debt who find it difficult to afford access to the housing market.