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Canadian commercial property deals soared to new heights in 2016 as a surge of foreign buyers aggressively bought up office, shopping and hotel properties across the country. It's a trend that's expected to continue this year as real estate investors look for safe havens.

Investors bought $34.7-billion worth of commercial property valued at more than $10-million last year, according to real estate brokerage CBRE Group Inc. That was a 33-per-cent increase from a year earlier, and surpassed 2007's record of $32.1-billion.

Underpinning that hot market was a group of international investors, particularity those from Asia, largely comprised of high-net-worth individuals and family offices. Foreign buyers accounted for about 27 per cent of Canadian deals in 2016, up from just 6 per cent the year before. China and Hong Kong accounted for 71 per cent of foreign commercial real estate investment; Europe made up 17 per cent, and the U.S. was 8 per cent.

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"It's really a global game, and Canada is on the radar of investors like never before," said Peter Senst, president of CBRE Canadian Capital Markets. He noted that geopolitical events such as Brexit and the U.S. election had made Canada's largest cities look comparatively safe, with Toronto and Vancouver standing out as "beacons in the night for global capital."

"Canada is becoming more interesting because of the perceived safety and the consistency in rule of law – some of the capital coming from other areas just doesn't have that," Mr. Senst said.

Vancouver attracted the most for foreign capital with $2.3-billion of acquisitions by outside buyers last year. Mr. Senst said that Chinese investors tend to start looking for property on the West Coast before moving east through Canada. Meanwhile, U.S. and European investors tended to begin their buying in Toronto, where $1.3-billion of deals were done last year.

Alberta is also attracting more capital with a 50-per-cent increase in trading volumes last year. That comes even as the commercial property market is reeling from the oil patch slowdown with above-average vacancy rates in office buildings. The province is benefiting both from investors looking for more attractively priced deals outside of Toronto and Vancouver, and those seeking to make contrarian bets on the recovering local economy.

At first, it was the highest quality office, industrial and retail properties in Calgary and Edmonton that drew interest, but now more "average" properties are coming to market. Mr. Senst said he expects this trend to continue into 2017.

The other contrarian bet that set records in 2016 was retail, where e-commerce concerns didn't dampen the $6.7-billion in transactions. And 2017 is already off to a strong start, with Cadillac Fairview's sale of Vancouver's CF Pacific Centre and other local properties to the Ontario Pension Board and the Workplace Safety and Insurance Board valued at more than $4-billion.

"Urban retail in one of the key investment themes for not only Canada, but around the world," Mr. Senst said.

The Canada Pension Plan Investment Board has been a recent buyer of malls in countries such as China, where the rising middle class is expected to bring new waves of shoppers.

"We find that when you get really granular there's a lot of value to be found in these things, which if you're a generalist and you're not looking with enough detail you can dismiss," said Mark Machin, chief executive of CPPIB.

As more international buyers seek Canadian land and properties, Canadian institutional investors are looking to move their capital abroad. The real estate investment business is becoming increasingly global as a result, Mr. Senst said. Already, cross-border deal making dominates the real estate industry; for example, Canadian property investor Brookfield Asset Management Inc. recently raised capital by selling office buildings in Toronto and Vancouver to Asian and German investors, respectively, while investing in emerging market cities such as Mumbai and Seoul.

"Everybody needs to diversify risk. Everybody's looking for an alpha strategy. It seems to be wherever you are, you're moving money around the world," he said.

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