CANADA SETS NEW IMMIGRATION RECORD
Canada set a new immigration record last year with more than 430,000 permanent residents arriving in the country. Immigration Minister Sean Fraser said in a news release Tuesday that the federal government has reached its goal of welcoming 431,645 new permanent residents in 2022. Ottawa beat its previous record set in 2021, when Canada welcomed more than 401,000 new permanent residents.
The previous immigration record was set in 1913, when Canada welcomed more than 400,000 newcomers, Statistics Canada data shows.
“Today marks an important milestone for Canada, setting a new record for newcomers welcomed in a single year. It is a testament to the strength and resilience of our country and its people,” Fraser said in the release.
"The federal government has reached its goal of welcoming 431,645 new permanent residents in 2022."
“Newcomers play an essential role in filling labour shortages, bringing new perspectives and talents to our communities, and enriching our society as a whole. I am excited to see what the future holds and look forward to another historic year in 2023 as we continue to welcome newcomers.”
In 2022, Immigration, Refugees and Citizenship Canada (IRCC) processed roughly 5.2 million applications for permanent residence, temporary residence and citizenship — double the number of applications processed in 2021, the news release added.
IRCC has added resources, embraced new technology, streamlined processing and brought more processes online, the release said.
“These changes are all important improvements to Canada’s immigration system, which will position us well for the future,” it added.
“As the Government of Canada focuses on addressing the acute labour market shortages we are facing today and building a strong economy into the future, one thing remains certain: immigration is a key part of the solution.”
According to the government, immigration accounts for almost 100 per cent of Canada’s labour force growth. Roughly 75 per cent of Canada’s population growth comes from immigration, mostly in the economic category. By 2036, Ottawa says immigrants will represent up to 30 per cent of Canada’s population, compared with 20.7 per cent in 2011.
By 2025, the federal government wants to see 500,000 people arrive in Canada per year, Fraser revealed on Nov. 1, 2022. Ottawa envisions an increase in immigrants that will see 465,000 people arrive in 2023, rising to 500,000 in 2025, with a heavy emphasis on admitting people based on work skills or experience.
Speaking with Global News in a year-end interview, Housing Minister Ahmed Hussen said Canada needs many skilled immigrants to help in the construction sector.
Job vacancies are expected to plague the construction industry in the coming years due to a wave of expected retirements, industry experts have previously told Global News.
“We know there is over a million jobs in Canada that remain unfilled, so we need immigrants, skilled immigrants, to come in and help us fill those unfilled jobs and help us grow our economy,” he said. “In addition to that, the irony is we actually need more people, skilled immigrants, to also help us in the building trades and the construction sector of our economy.
INFLATION STILL NOT UNDER CONTROL
The Consumer Price Index (CPI) rose 6.8% year over year in November, following a 6.9% increase in October. Excluding food and energy, prices rose 5.4% on a yearly basis in November, following a gain of 5.3% in October. Slower price growth for gasoline and furniture was partially offset by faster growth in mortgage interest cost and rent. On a monthly basis, the CPI rose 0.1% in November following a 0.7% gain in October. On a seasonally adjusted monthly basis, the CPI was up 0.4%.
On a monthly basis, gasoline prices fell 3.6% in November following a 9.2% increase in October, largely driven by price declines in Western Canada. The reopening of refineries in the western United States contributed to lower prices in British Columbia, Alberta, Saskatchewan and Manitoba. Year over year, gasoline prices rose 13.7% in November after rising 17.8% in October.
Prices for food purchased from stores rose 11.4% year over year in November, following an 11.0% gain in October. Food inflation remained broad-based, with prices for groceries rising at a faster rate than the all-items CPI every month since December 2021.
Canadians saw prices increase at a faster pace in November 2022 for non-alcoholic beverages (+19.4%), fresh fruit (+11.0%) and meat (+6.2%). Chicken prices rose 9.3% on a year-over-year basis, due partly to reduced global supply, as farmers have culled and quarantined birds infected with avian influenza.
Prices for shelter (+7.2%) rose at a faster pace year over year in November, mainly due to upward pressure from the mortgage interest cost and rent indexes.
Mortgage interest cost continued to rise at a faster rate year over year, up 14.5% in November compared with 11.4% in October, amid the higher interest rate environment. The increase in November was the largest since February 1983. The rent index rose 5.9% in November on a year-over-year basis following a 4.7% increase in October. Among other factors, a higher interest rate environment, which may create barriers to homeownership, put upward pressure on the index. Rent prices accelerated the most in Prince Edward Island (+12.6%), British Columbia (+7.2%), Quebec (+5.3%) and Ontario (+7.1%).
APARTMENT SALES FREEZE
CFR Apartment Group
According to Altus Group "following a record setting first half, investment activity in the GTA commercial real estate market decelerated in the third quarter which concluded with $6.1 billion in total investment volume. Going from the fourth quarter of 2021 to the first quarter of 2022, there was portfolio activity and a buying frenzy in the market. This buying frenzy remains aggressive as of the third quarter of 2022. The investment totals and transactions registered were drastic decreases of 34% and 24% respectively compared to the third quarter of 2021."
This was the situation in the Apartment Market also. 2021 was a stellar year in terms of value gains and market activity. This continued into Q1-2022 and then came the Bank of Canada and the increases in rates, seven in a row to be exact from the spring of 2022 to the end of 2022. The amount and speed of interest rate increases has not been witnessed in over two decades. But it appeared that transaction in Q2 and Q3 were still robust. Due to many factors deals took longer to complete and were much tougher to hold together but deals were happening.
Most could not gauge the reality of the market as most of those deals closing in Q2 and Q3 2022 were for the most part negotiated and undertook 3-6 months prior. The proof in the proverbial pudding was to be Q4 2022 activity and pricing. Well most of the pudding is in.
We track sales from a variety of sources and there still will be some last minute or year closing what will materials between today and the end of January 2023. However, the amount of Q4 2023 sales is stunningly silent. Thus far there have been 5 sales (over 15 suites). This is lowest amount of sales in any quarter that we have recorded since 1995. There were 10 sales in Q3 2022. As such in the last half of 2022 there have been 15 deals done. This is down from 38 in 2021 or a drop of 60%! For the entire year it appears that there will be around 65 sales completed. Which is not only down 30 sales from 2021 but is the second lowest amount of sales in any year for the past 25.
But you may ask "What about pricing and cap rates?" The jury is still in deliberation on that one. There is not enough data to show a trend. Thus far it appears that prices and cap rates have remained flat but we will not know a definitive trend until at least Q2 2023. There definitely has been a cooling from the buy side given where interest rates are and what lenders are providing for financing. That said rents are going through the roof IN ALL MARKETS. Mentioned previous in our Digest immigration is at an all time high and 60-70% of those end up in the GTA. More and more students are coming in and housing is still unaffordable for most people which means they will need to rent.
RECENT APARTMENT SALES
2929 CARLING AVENUE - OTTAWA - $6,500,000 / 5.50% Cap Rate
This is a sale of a 3.5 storey detached rental apartment building containing a total of 45 suites. The 0.43 acre site was improved with a concrete walk up building dating from the 1970's with surface and covered parking, gas heating, on site laundry and double windows. The property represented a well located entry level investment property with rental upside. The asset was fully marketed and was purchased by a private investor.
72 MAPLE STREET WEST - AYLMER – $4,050,000 / 4.50% Cap Rate
This sale is of a 3 storey walk up rental apartment building dating from the 1980's. It has a masonry exterior, double windows, balconies and a flat tar and gravel roof. There is HWG heating and air conditioning as well. The 23 suite building has one and 2 bedrooms with larger suite sizes 750-850 sf. Over 50% of the suite have been renovated and there still is over 30% rental upside overall. There is on site laundry and the tenant profile is mostly seniors. The asset was fully marketed and was purchased by a private investor.
435 NELSON STREET - LONDON - $3,280,000 / 4.50% Cap Rate
This property comprises a well located concrete rental apartment building with a total of 23 suites. Dating from the 1950's this mid rise building has all one two bedroom suites with brick exterior, double windows and flat roof. The 0.6 acre site is located in a single family residential area and there are 23 surface parking spaces. There is HWG heating with 3 NTI boilers. The flat roof was replaced in 2012. Tenants pay their own hydro and the tenant profile is manly seniors. The property was fully exposed and sold to a private investor.
1 LAKESHORE ROAD - KIRKLAND LAKE - $2,850,000 / 5.25% Cap Rate
This is a 24 suite walk up rental apartment investment in Northern Ontario. This is a substantially upgraded asset with over $500,000 recently spend on: roof, exterior, electrical, hallways and stairwells and in suite. Mostly two bedroom suites and electric heating the tenants paying their own hydro. The site is just under 0.90 acres and the asset is fully occupied. The property was fully exposed and sold to a private investor.
THE APARTMENT GROUP
Together the team has completed over 1,500 transactions and has sold over $7.0 billion in apartments and development land. Put us to work for you and see the results. NO ONE has sold more buildings than our group. Experience, knowledge and professionalism will insure you get the right deal or the highest price if you are selling.
The Apartment Group is a dedicated team of professionals specializing in the sale of multi-residential investment properties. With over 40 years of combined experience, the team brings together their strengths including strong negotiation and sales skills along with highly technical market analysis and appraisal methods.
We are a boutique Brokerage but have the capabilities of the larger houses without the overhead. We have: an internal database of over 10,500 active apartment and land Buyers; a list of all apartment building owners in the Greater Toronto Area; our web site gets over 50,000 hits a month; we highlight properties for sale through our newsletter which reaches 10,000 investors monthly.
President & Owner,
LORENZO DIGIANFELICE, AACI
Broker of Record, Owner