Canadian real estate continued to deliver strong returns for investors in 2006. The total return came in at 18.6%, just shy of the record of 18.7% set in 2005, and more than double the 20 year average of 9.1%, according to the ICREIM/IPD Canadian property index.

The Canadian property index is published annually by IPD (Investment Property Databank) in the UK and The Institute of Canadian Real Estate Investment Managers (ICREIM). It is is based on data from pension funds, life insurance companies and real estate managers on over 2,000 properties with a capital value of approximately $73 billion.

“Yet again the 2006 story was an East vs. West affair,” said Doug Rowlands, senior analyst at IPD. “Exceptional capital value growth in Alberta powered returns to near record highs.”

Edmonton and Calgary recorded the highest property returns of the six major markets, at 35.2% and 30.4% respectively.

Returns also improved in Vancouver (22.8%) and Montreal (18.3%). Lower returns in 2006 in Toronto (13.1%) and Ottawa (12.6%) kept these markets well back.

Office was the strongest performing major sector for the first time in nine years, with a total return of 21.4%. Industrial posted another solid year, at 18.2%.

Returns on residential rental properties improved but continued to lag other sectors, at 14.9%. After leading in the previous four years, retail fell back to 16.5%.