Emerging Trends in Real Estate 2012 - Urban Land Institute

chapter 5
Emerging Trends in
Canada
“We’re hedged against most bad outcomes.
It’s hard to blow it here.”
Appreciating their “island in the storm,” temperamentally
conservative Canadian real estate players grapple with
tamping down unaccustomed overconfidence and wondering
whether mostly stable property markets won’t be buffeted
by world economic turmoil, particularly U.S. contagion. Offsetting
the increasing “global market risk,” Canada’s considerable aces
in the hole remain “a robust banking system,” the fiscally sound
government, and rich stores of natural resources and commodities,
as well as steady immigration. “If not for what’s happening
elsewhere in the world, Canada would be on fire. It makes a big
difference when the government is not broke.”
Investment Trends
Slowdown. For 2012, solid market recoveries could turn more
muted, sustained by modest, “not stellar” income growth.
Western provinces and Newfoundland will prosper as long
as energy prices allow, while most of the east deals with an
export/manufacturing slowdown and potential financial industry
belt-tightening. According to an interviewee, “The downgrade
of the American system and the volatile status of the oil patch
make the economy fragile and unpredictable,” and create more
marketplace risk. Typically restrained Canadian consumers had
been on uncharacteristic spending and homebuying binges
encouraged by low interest rates, but their self-assurance has
ebbed, and job growth has decelerated in response to all the
noise about European and U.S. debt woes. Sensing a “general
slowdown,” interviewees signal taking a better-to-be-cautious
investment approach. “Greed is off the table. We need to
remember we’re a small player in a big pond.”
Strengths and Weaknesses. Canadian companies have
strong balance sheets, and the overall economy is buffered
Exhibit 5-1
Firm Profitability Forecast 2012
Prospects for Profitability in 2012 by Percentage of Respondents
1.0%
Poor
1.0%
Modestly
Poor
19.0%
Fair
12.0%
Modestly
Good
47.0%
Good
17.0%
Very Good
3.0%
Excellent
Source: Emerging Trends in Real Estate 2012 survey.
Note: Based on Canadian respondents only.
Emerging Trends in Real Estate ® 2012
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