The head of Canada for the real estate arm of Quebec's largest pension fund concedes there is still a lack of liquidity in the market, but the executive is preaching patience for 2024.

"Currently, it feels more like a buyer's market," Annie Houle told CoStar News in a December interview on the state of the market. "Like anything, real estate is long-term and cyclical. You balance this with the short-term nature of the investment trade business or profession, which is looking for short-term return."

In April 2022, Houle joined Ivanhoé Cambridge, a subsidiary of Caisse de dépôt et placement du Québec, which owns interests in 1,500 buildings and had $77 billion in real estate assets as of Dec. 31, 2022.

Houle said until there is more certainty on interest rates, she expects to see more price discovery in the market. "The bid-ask spread is pretty high between what the buyer and seller are expecting," said Houle.

On office, while much has been said about vacancy rates, which hit an all-time high nationally in the fourth quarter, the executive said there is a bifurcation in the market based on building type.

"Take our head office," said Houle, referring to its building at 1001 Rue du Square-Victoria in Montreal. "It's a net-zero building already. It is well-located on transit. It's close to everything. It has amenities. It is kind of the office of the future. It still has great value. It has all the upside potential."

The executive said the real estate company has added more art to its buildings, giving the properties a unique character.

"It changes the tenant and the guest experience when they come into the building. It's a way to put forward our cultural legacy, it makes bridges to the community, and it favours local artists," she said, noting Ivanhoé Cambridge's new CIBC Square in Toronto has artwork printed on back-lit glass as people enter the elevator bays. "It makes the mundane activity of taking the elevator so much more beautiful. It's little things."

More than that, the art they are putting in buildings could be viewed as an alternative investment class.

"Art is a market. We own them. They have a value, and we appraise it regularly," said Houle. "Some people visit our headquarters just to visit our collection."

For 2024, Houle said investors with agility can make moves in the market.

"When we look at current dynamics, structured credit is appealing," she said, adding mezzanine debt and preferred equity are areas Ivanhoé Cambridge could look to for investment. "We are real estate experts, which means if things don't plan out as expected for the equity owner, then we know what to do."

On the hot political topic of the federal government suggesting more of the $3 trillion in Canadian pensions stay invested domestically, Houle noted it has always been a cornerstone of its parent company's mandate to invest a substantial amount of its $400 billion in assets in Quebec.

The Caisse has said it will increase its investments in Quebec from $80 billion to $100 billion. "It's significant in terms of encouraging the growth of the economy," she said.

Ivanhoé Cambridge will continue to look to invest in "core cities" in Quebec, including retail, office, hotels, logistics and residential strategies. "We have a bit of everything," Houle said, noting in some cases the company owns land that is home to regional malls where there is potential to add density.

Houle said the real estate company has purchased land to develop near stations that are part of the Montreal area's new regional rail system called the Réseau Express Métropolitain.