Canada Market Update: October 28, 2024
Written by Elliot Higgins, Analyst
October Rate Cut
The Bank of Canada announced a 50-basis-point rate cut, bringing its policy rate to 3.75%. Economists and major Canadian banks widely anticipated this decision, as headline inflation dropped to 1.6% in September—below the Bank’s 2% target for the first time in three years. This decline, coupled with weak economic data, led five of the six major Canadian banks to predict the rate cut. However, TD forecasted a smaller 25-basis-point reduction.
The unemployment rate fell to 6.5%, with 47,000 new jobs added. Despite this, other economic figures show softness in the labor market. For example, population growth has outpaced job gains, and the labor force participation rate has declined. Governor Tiff Macklem has previously stated that the Bank is ready to cut rates further if economic conditions warrant. Canadian bond yields have already reflected these shifts. The 5-year bond yield is now about 3%, down from a peak of 4.32% in October 2023.
This fourth rate cut of the year provides relief to developers and investors by reducing short-term borrowing costs. Additionally, further rate cuts will help clarify where long-term interest rates will settle. This clarity could stimulate more activity in acquisitions and development. Developers and investors now need specialized financing. Leveraging Largo’s extensive network can help them secure competitive rates and tailored loan structures, which may not be available through traditional lenders.
Alignvest Student Housing REIT Acquisition (ASH REIT)
Forum Real Estate Income and Impact Fund (REIIF) will acquire Alignvest Student Housing REIT for $1.686 billion. This deal reflects a 17.08% premium over the appraised asset value of $1.44 billion as of October 1, 2024. The merger will create the largest owner and developer of purpose-built student housing in Canada. Moreover, the deal presents significant expansion opportunities in key university markets. The forum expects to close the acquisition by the end of 2024.
Downsview Master-Planned Community october 2024 canada market
Live Nation will build a temporary Rogers Stadium at Downsview Park, Toronto, on the former Downsview Airport site. This open-air venue will seat 50,000, making it Toronto’s largest purpose-built outdoor concert space. The stadium will host major concerts and events from June to September. It will operate for five years on 44 acres of the former airport site. This project supports Northcrest Developments’ $30 billion redevelopment of the Downsview area. The plan includes residential, commercial, and public spaces. Major construction will begin in 2026.
