Future of real estate in Canada

In the past two years, the Canadian economy has faced significant challenges, including high inflation, peak interest rates, and economic upheaval. The real estate industry has borne the impact in the form of slower growth, higher capital costs, rising vacancies, and uncertain tenant demand. Year 2025 looks more optimistic, though, as owners and developers, across property types, will likely benefit from lower borrowing costs, higher business investments, and improved consumer spending. While the economic growth is expected to improve, challenges like a softer labour market, the prohibitive cost of home ownership, muted business confidence, and global economic volatility continue to present risks to sustained growth. Further, elevated construction costs and labour shortages could continue to affect cash flows and profitability.

In this edition of our Future of real estate series, we focus on key themes that will drive the Canadian real estate industry in 2025 and beyond and provide our thoughts on ways in which Canadian real estate organizations can navigate and thrive. Notwithstanding the macroeconomic challenges, there are key aspects in these themes that need the attention of real estate executives. If done well, these could help to improve operational efficiency, spur growth and new revenue streams, and strengthen risk management. Our insights are backed by our local survey of Canadian real estate owners and tenants and our global survey of owners and investors, which also included Canadian respondents.