Canadian Real Estate during COVID-19
The Canadian Real Estate market has long been a sound and predominantly stable industry, with cities such as Vancouver and Toronto boasting some of the best-performing markets in the world over the past decade. Over the course of the past 6 months, uncertainty and panic over the COVID-19 pandemic has caused many markets across the world to experience large declines - both in activity and profits. Canada’s economy however, has remained somewhat resilient ti the negative affects of this international crisis, even showing growth in many sectors. The steadily increasing flow of immigrants has been a large factor in not only generating new jobs and investments in the country, but has also been a large driving force behind the expansion of housing and residential construction projects in many major cities.
Historically, Canada has always been a country with policies conducive to immigration, welcoming large numbers of immigrants from all over the world with open arms. This is in addition to the numerous international students and foreign workers which arrive in the country ever year. Although travel has been extremely limited over recent months due to restrictions placed on international flights and border crossings to help combat the spread of the novel Coronavirus, Canada has continued to see a steady flow of immigrants entering the country. Surprisingly, these numbers have been increasing since the beginning of the pandemic. In April of 2020, Canada saw a total of approximately 4,000 new immigrants entering the country, while in the month of May, that number almost tripled to 11,000.
These numbers have continued to increase, reaching 13,645 June and July combined, 8,050 in August, reaching the highest number in Canadian history in September, with 12,600 immigrants entering the country. The majority of these immigrants came from India, China, Philippines, USA, and Nigeria. Furthermore, federal Immigration Minister Marco Mendicino recently released the planned immigration levels, stating that Canada will admit 341,000 permanent residents in 2020, 351,000 in 2021 and 361,000 in 2022.
“Toronto and Canada as a whole, always have been, and always will be, one of the most stable and profitable real estate markets in the world”, said CEO of 8608 Capital Ardy Khavari. “The immigration numbers, coupled with high investor activity, will continuously create the demand for housing, and in turn, the construction and development of new residential projects will always need to increase in order to create the supply to satisfy this demand. Thus, prices will always increase in the long-term, and the industry will continue to expand. This is why one of our main focusses at 8608 Capital has always been investment in Canadian Real Estate, as the returns have been consistently strong, and the market has proven to be low-risk.”
However, Mr. Khavari did add that the higher number of cases and the increased potential to spread the virus in more densely populated areas has resulted in many individuals opting to move out of Toronto and its downtown core (as is the case in many major cities around the world), in fear of contracting COVID-19. “As lockdowns and quarantines remain prevalent, many employers are adopting remote working programs, allowing their employees to complete their work responsibilities from the safety and comfort of their own home. This increased flexibility, coupled with the increased risk of infection in highly populated areas, has provided the perfect scenario for many individuals and families to relocate to surrounding cities and rural areas in the Greater Toronto Area”.
With all things considered, it is important to remember that we are still in the grips of a very uncertain pandemic. There have been some slightly negative effects on the economy and real estate market, and it is not completely clear what the future holds in store. Rent prices, for example have been decreasing steadily each month since March 2020. Also, many construction projects are facing delays. The Building Industry and Land Development Association of Ontario recently published a survey, from Altus Group Ltd., which concluded that of 498 construction sites (which represents 156,000 units in the GTA), 65% were facing delays of 3 to 6 months, and 32% of the sites with delays over six months. This means that occupancy for more than 8,000 units will de pushed back into 2021.
While delays, and lowered rent prices have been some of the negative effects of COVID-19 on Canada’s Real Estate market, the growing flow of immigration, investor activity, and new residential development and construction projects have worked to counteract any significant damages. Markets such as Toronto are continuing to see increased activity, and provide a glimmer of hope amidst uncertain and pressing times. If the history of the country’s real estate markets is any indication, Canada seems to be in a position to stand strong and continue its growth even during this pandemic - and surely well into the future.