Report | Intelligent Investment

Canada Real Estate Market Outlook 2023

February 28, 2023


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A year of changes – positive, ultimately

Although expectations called for a return to stability in 2022, the pace of change did not let up and the year was anything but stable. Eight successive interest rate hikes by the Bank of Canada saw the pace of commercial real estate investment slow in the latter half of the year following the records set in the first half. 2022 proved to be an uneven year. Key indices including the TSX, oil pricing, housing prices, and Canadian REITs ended the year in the negative. However, context is key and when measured against early 2020, before this period of change, each of these indices yielded positive returns.

More good than bad

2023 will see higher costs of capital impact asset values, however there is likely more good than bad to come. A soft landing is expected where the economy should see a technical recession while still being positive on the balance of the year. Capital market volumes are expected to rebound in the spring, interest rates will be closer to going down than up, and the continued growth of the digital economy will only benefit Canada.

Across all key indicators, Canada set to lead G7

Housing affordability, commute times and decarbonization will prove harder to solve, requiring more attention from government, tenants and investors. While the pace of change will not ease, real estate is a long game where performance is driven in large part by the broader economy. Across all key indicators – population, GDP and employment growth – Canada is set to lead the G7 over the coming five years.

Major trends in detail

Our 2023 outlook details the major trends that will dominate the year. Should you have any questions about how these trends could impact your specific real estate strategy, please do not hesitate to contact us.