This year’s PwC Canada and ULI’s Emerging Trends in Real Estate (ETRE) report revealed an intricate landscape for Canada’s real estate industry in 2024.
According to the report, there was noticeable intensification of certain patterns, such as elevated interest rates and more expensive and scarce capital, which is causing a divergence in the real estate landscape. This is resulting in heightened challenges for numerous companies and contributing to a reset in the Canadian real estate sector.
The report, however, highlighted that companies are generally confident about overall demand for real estate and that Canadian real estate companies are focusing on value creation by optimizing assets, investing in digital transformation, and addressing generative AI, ESG performance, and housing affordability trends.
“This year it was all about capital. There is compelling data to show that scarcity of capital has impacted investment volumes. However, this creates opportunity as we saw many new private debt funds established to take advantage of this unique moment in time,” said Frank Magliocco, real estate Leader, PwC Canada.
The report also noted that there are many factors holding back industry activity which include interest rates which are predicted to remain high for longer periods of time and rising financing costs and less capital being made available for real estate.
While there is a housing affordability crisis, governments have introduced policies to streamline housing approvals as well as remove tax barriers.
“Market forces are challenging public policy objectives and corporate ESG goals. Industry leaders are keenly watching this space as they look for some respite from the economic headwinds, inflation, and volatile interest rates,” said Richard Joy, executive director, Urban Land Institute, Toronto.