The world is going through an unstable economy and uncertainty pertaining to the consequences of the Brexit vote that Britain went through recently. Other proceedings that are yet to occur which also has a huge impact on the dealing of the world’s trade include the United States presidential election December 2016 and elections in 2017, in both Germany and France and the slackening of Brazil and China’s economies Pierre Pequegnat said that “As a result, political and economic contagion may keep investors off-balance while the EU’s trade deals with Canada, the US, and Japan, may become protracted and take backseat to more pressing Brexit matters.”
There is a foreseeable expectation of rates being cut down to zero in the middle of a likely slowdown in the growth of the economy back in the UK, together with a credit crunch being at risk of increment and more unwavering returns on investment offered by countries and capital skilled flights to quality. On the early hours of June 24, capitals were transferred to bonds, gold and US Treasuries by investors. The trends of commercial real estate are calculated in decades and years. However, certain factors can cause a change in the values of trade and real estate investment.
Pierre Pequegnat said that, “As Brexit and economic concerns have heightened short and long-term uncertainty, investors are now more likely to maintain above average interest in North American markets relative to Asia, the EU, the UK and the Emerging Markets. Capital inflows are supporting the US dollar. This, in turn, helps support a low-interest rate environment.”
The United States Federal Reserve will be greatly affected by Britain’s vote to leave the EU, and the interest rate will possibly go down to zero based on a recent research which indicated the federal reserve bank of the U.S is firmly bound to international economic situations. Amid the whole economic crisis and the uncertainty going on in the UK, the global interest rate will possibly stay at an even lower rate for quite a long period of time.
Pierre Pequegnat said that the US and the Bank of Canada are doing their best to have their interest rate as low as possible. This will allow foreign investors to have a chance to buy in Canada’s commercial real estate and park medium to long term cash with the benefit of access to low Canadian/US dollar exchange rate included. As the Brexit storm will take some time to cool down, investors can venture in commercial real estate where they can benefit from as it is less unpredictable and private equity companies will receive long-term returns. Wise investors who can evaluate the real estate market can find opportunities in real estate. If the situation of the economy worsens, commercial real estate owners in Canada will have to look at leases that are underlying, most especially direct or indirect leases reliant on EU business partners and the UK.
“As a result, the Canadian commercial real estate market is about to be perceived internationally as ripe with opportunities, by capitalized investors seeking long-term returns and a foreign currency exchange play,” comments Pierre Pequegnat.