The global value of professionally managed real estate dipped in 2023, while Canada’s share of the total market nudged up modestly. MSCI’s newly released annual calculations peg the global investment property market at USD $13.2 trillion as of last Dec. 31, with approximately USD $423 billion worth of those holdings in Canada.
Last year global value fell 0.9 per cent relative to 2022, largely attributable to a 6.4 per cent or USD $410 billion slide in the United States, whereas Canada posted a USD $19 billion uptick and a 17 basis point (bps) gain in its weighting in the total market. Canada continues to rank 9th among the 37 nations MSCI monitors, but now represents 3.2 per cent of global market size, up from 3 per cent in 2022.
MSCI analysts highlight the moderating steepness of the decline in market size in 2023, following a 4.2 per cent year-over-year drop in 2022. However, the drop-off in investment transaction volume was more dramatic, with the 2023 tally plunging by 48 per cent from 2022. Accordingly, the global turnover ratio, which represents transaction volume as a percentage of total market value, averaged 4 per cent in 2023 versus 8.7 per cent in 2022.
In his introduction to the 2023 details, MSCI co-head of private capital, René Veerman, reiterates the now familiar reasons for sluggish activity as vendors and would-be purchasers fail to find common ground. “Moves in the pricing of commercial real estate have come through at a glacial pace in comparison to other asset classes. Publicly traded real estate vehicles, for instance, repriced quickly in 2022 in response to the interest rate shocks,” he observes.
It appears deal-makers were somewhat more amenable in Canada, which registered the sixth highest turnover ratio at 6.1 per cent. That was topped by South Korea (7.3 per cent), Taiwan (7.2 per cent), Spain (6.8 per cent), the U.S. (6.2 per cent) and Portugal (6.2 per cent), as 20 countries surpassed the global turnover average.
The U.S. remains the largest player by a wide margin, but dropped from 40.3 per cent to 37.5 per cent of global value last year. As well, Belgium, Taiwan, Malaysia, Austria, Japan, Germany and Norway all experienced a smaller degree of shrinkage in 2023.
The five largest markets — also including China, the United Kingdom, Japan and Germany — represent about 65 per cent of total global value. Canada is part of the next quintile — along with France, Australia, Hong Kong and Switzerland — which collectively makes up another 18 per cent of the market size.
