“The market needs new housing desperately, and there are plenty of projects that are ready to go,” he said. “So I’m cautiously optimistic because although we understand that lenders are going to have challenges managing their own portfolio, there are also going to be huge opportunities in the market on good new construction deals.”
Canada’s mortgage and housing markets may see an upturn in 2024, but the recovery is expected to be gradual, according to Drew Donaldson, founder and CEO of Donaldson Capital.
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 10, 2024
Alexander Durand, head underwriter and commercial mortgage agent at MCommercial, told CMP that purpose-built housing and industrial properties were set to witness a strong performance in Canada in 2024, particularly in larger cities such as Toronto, Vancouver, Montreal, and Halifax.
Smaller cities might see a more difficult time on that front in 2024, he cautioned. “The larger cities probably will have a bit of an easier time with some of the announcements made by the federal government on changes coming to [incentive] programs,” he said. “It’s going to be difficult for smaller cities because we’re not quite sure how the incentives and changes are going to impact them.
“As for industrial, it should be pretty much the same: there’s some talk of it cooling down a little bit, but that cooldown has just been vacancies going up from 1% to 2%. So it’s still in a very good spot, and we’re expecting it to continue for at least the next four months.”
ESG set to play significant role in Canadian commercial market
A trend that’s expected to play a big role in the commercial lending space in the coming years is the growing prominence of ESG (environmental, societal and corporate governance). Borrowers with a strong commitment to those principles, according to Alexander Durand, are likely to be viewed increasingly favourably by lenders.