Canadian real estate companies are at a defining junction. In contrast to the booming conditions of the past few years, interest rate hikes, runaway inflation, and turbulence in the geopolitical environment have cast a shadow of uncertainty over the global economy and the business of real estate.
“There is no doubt that the real estate market in Canada is experiencing a reset,” said Frank Magliocco, Real Estate Leader, PwC Canada. “Players in the industry are navigating this disruption in different ways. For some, it has led to a pause in development decisions and transactions. According to PwC’s report, tightening borrowing requirements and higher financing costs will continue to put a damper on the ability to raise capital and progress projects forward. As a result, competition between companies will continue to deplete as some players choose to “stay on the sidelines” until the market settles.
Another trend forecasted by PwC is a push towards sustainability and net-zero emissions. While this is expected to be a priority amongst investors, companies may embrace the change a little slower. Separate findings from PwC’s 2022 global CEO Survey showed that only 19% of real estate executives were committed to reducing net-zero greenhouse gas emissions within their organizations.