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What Does Canada’s New Immigration Record Mean for the Future of CRE?
January 23, 2023 4 Minute Read
Canada just got a little more diverse.
The country welcomed 431,645 permanent residents in 2022, the largest yearly influx of newcomers in Canada’s history.
This beats the previous record of 401,000 new residents admitted in 2021, which was mostly playing catch-up from the pandemic pause. Before that, the record dated back to 1913 and the federal government plans to increase immigration by an additional 25% by 2025.
In a world of increasing protectionism and nationalism, Canada’s immigration strategy is getting a lot of attention. The BBC recently marvelled that, “This plan would see Canada welcome about eight-times the number of permanent residents each year - per population - than the UK, and four-times more than its southern neighbour, the United States.”
How will this immigration affect commercial real estate? We spoke to CBRE Chairman Paul Morassutti and Research Director Marc Meehan to get their takes.
“Immigration plays a crucial role in maintaining Canada’s population growth and economy,” explains Morassutti. And while immigration may be a polarizing issue in the U.S., he notes that most Canadians are in favour of increased immigration. “More people translates into more demand for everything, housing, places to shop and work, and logistics to support it all, which is good for the real estate sector and basically all property types.”
Meehan adds that in addition to growing demand and the economy, “Increased immigration can help address labour shortages and concerns about how we will manage to backfill and support our aging population.”
What other impacts will play out when a country of 38 million people welcomes 1.45 million new permanent residents over the next three years?
Soaring Housing Demand
Record immigration bodes particularly well for the multi-family sector. “Immigrants typically rent for the first few years upon their arrival,” says Morassutti. “So multi-family housing owners and investors can expect demand to intensify over the next few years.”
Canada may struggle to house this massive influx of newcomers, however, and far more supply will be needed. Morassutti points to the construction of new purpose-built rentals to accommodate the arrival of new residents.
“Canada needs new housing policies that correlate with this surge in immigration. We risk having a solution to one problem that makes an existing problem, the housing affordability crisis, even worse,” says Meehan.
Skilled Labour, Diverse Perspectives
Increased immigration is essential to addressing labour challenges. “The majority of immigrants are highly skilled due to the rigorous selection process,” says Morassutti. “They often take on jobs that Canadians are unable to fill due to shortages.”
Most Canadian permanent residency permits are allocated to economic immigrants who have the means to invest, open a business or fill a job in high demand. According to the government, immigrants account for 36% of the country’s physicians, 33% of business owners with paid staff, and 41% of engineers.
Of the 5.2 million applications processed by the federal government in 2022, approximately 8.3% were selected.
But Canada is also struggling to fill vacancies in low-paid positions in the service and health care industries. It remains unclear how the government plans to address these shortages.
“What is clear is Canada is basing its economic future on increased immigration, more than almost any other country,” Meehan says.
“It’s a good news story because Canadians are largely inclusive and welcoming. That said, this volume of newcomers has few modern parallels, so there will be unexpected knock-on effects for services and existing trends, including commercial real estate.”
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