Real estate property investment and hedging as a Canadian investor

Abstract

Many large investors are contesting high management fees on alternative assets by managing investments in-house, and investing in real assets. As a large investor, CPPIB can afford to do so as they enjoy long time horizons and little capital rationing concerns. This means that they can invest directly in many real assets across shores, which aids in diversification and gives cause to not hedge currencies. However, for short-term horizon or capital rationing restricted investors, these opportunities may not be as lucrative. This paper explores real estate investment opportunities for Canadian investors – including sensitivity analysis on the exponential housing price increases witnessed in Toronto and Vancouver. It features insight into the real estate opportunities between residential and commercial, domestic and offshore, and finally hedging strategies of a Canadian residential real estate property investment.