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Higher Immigration to At Least 2025

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The government announced this week an upward revision to immigration targets. While the targets were already considerably higher than pre-pandemic levels, they’ve been moved up again, to a record level of 500,000 a year going forward. As you can see in the chart below, this is a big increase from where we’ve been in terms of immigration in the 2013-2020 period. 

 Research Graph

You all know I’m a big believer in the fundamentals, and there’s no bigger fundamental than population growth itself. Canada is rather unique among wealthy countries in having such high immigration – many nations like Italy, Japan, Greece and Portugal are actually shrinking. This population boom in Canada has been a tailwind for almost every aspect of real estate: housing certainly, ecommerce and warehousing, hospitality, retail and so on. 
Let’s remember that the largest component of immigration (by far) is ”economic” immigrants. While refugees or humanitarian immigration gets a lot of coverage and political debate, 60% of immigrants are selected based on employability and education. This means they are generally young, speak English/French, have a university education and are prepared to work in Canada immediately. 
This doesn’t solve everything for real estate. We sometimes get caught up in rising immigration numbers, and assume this erases the challenges of borrowing costs, inflation, declining currency and the other headwinds. As high as the immigration targets are – and they’ve never been higher – we’re talking about slightly more than 1% of the total population. Make no mistake, that’s a lot compared to most wealthy countries, but growing your population by 1% a year doesn’t necessarily change the entire investment or leasing environment. This is still a positive development, but we have to also keep our eye on return to office, investor sentiment and interest rates. 

The federal government announced new higher immigration targets to 2025, at levels that are now ~75% higher than pre-COVID levels. The major of immigrants will be in the ”economic” category.