Canadian Real Estate Market Update – Q3 2023

Fiera Capital forecasts a 55% probability of ‘stagflation’, where economic growth slows, and inflation remains high, prompting policymakers to ease tightening measures. This scenario could lead to a wage-price spiral, pushing inflation higher and possibly causing more aggressive rate hikes, ultimately stalling the economy. Risk assets may see reduced valuations, but not as severely as in a deep recession. The outlook for commercial real estate is mixed due to various factors including the pandemic’s aftermath, rising interest rates, and geopolitical uncertainties. However, Canadian real estate, particularly in the industrial and multi-residential sectors, remains robust, attracting foreign investment despite these challenges. Overall, while private and foreign capital has been active, institutional participants in the Canadian investment landscape have largely maintained a reserved stance. This reticence might find resolution as greater clarity emerges regarding the Bank of Canada interest rate policy in the coming quarters.

Resultingly, real estate is expected to outperform traditional assets like equities and bonds in the long term, especially in a high-inflation environment. Effective capital allocation to real assets is key, necessitating experienced managers for superior performance and informed decision-making. Fiera Real Estate, with its asset management expertise and proprietary Target Markets Model, is well-positioned to navigate these conditions, align investments with long-term goals, and protect capital value in fluctuating markets. As the economy shifts towards recovery, real estate stands to benefit from macro-tailwinds and potentially deliver excellent performance.

Read our quarterly Canadian Real Estate Market Update, produced by our Strategy, Planning and Analytics team, to learn more about the current state of the office, industrial, retail and multi-residential asset classes, and what to expect for 2023.