What trends are driving the Canadian real estate sector, and what impact could they have on your business?
From global macroeconomic forces to the latest innovations in real estate-focused technology, our specialists are constantly on the alert. We've summarized the key takeaways from the National Real Estate Forum held in Toronto in December 2019.
The outlook for the global economy is muted amid ongoing geopolitical tensions, the beginning of a trend toward de-globalization and the contraction of trade for the first time since the last recession. Globally, growth has been slipping for the past 21 months. Global economic activity remains weak, with growth forecast at 3% in 2019—the lowest level since 2008. While growth is expected to pick up modestly to 3.4% in 2020, a more tepid pace of global activity may materialize in light of slowdowns in China and the United States, as well as other prominent downside risks.
There are conflicting views as to whether or not a recession is on the horizon, resulting in heightened levels of uncertainty. Both globally and in Canada, excessive debt is stifling growth. The World Bank identified rapid accumulation of debt as a threat to global economic growth, with the global debt-to-GDP ratio reaching an all-time high of 322% in Q3 2019.
The Canadian economy has slowed as exports and investments weaken, consumption falters and the debt to income ratio expands. Growth is expected to be about 1.5% in 2020. In December, the Bank of Canada decided to hold interest rates at 1.75%, citing early evidence that the global economy is beginning to stabilize and growth will increase in the coming years. Although officials may continue contemplating cutting interest rates to keep the Canadian dollar low to mitigate the impact of trade conflicts, expectations are that rates will remain unchanged in 2020.
Looking out for your future
Today’s real estate sector is being driven by both internal and external market forces, and it’s essential for developers, investors, builders and others working in the industry to understand how trends can create new opportunities, as well as risks. At Grant Thornton, our team is monitoring what these trends could mean for your business and assessing how you can maximize your growth potential.