Did the recent Quebec budget go far enough to address the current offer and supply imbalance? The recent budget announcement made by the government of Quebec, which includes several measures aimed at addressing the rising cost of living, stimulating economic growth, and supporting innovation and research could, in effect, have several repercussions across the commercial real estate market. 

One of the key challenges facing Quebec residents, including those who rent or own commercial real estate, is the rising cost of living and construction. To tackle this issue, the government has allocated $650M on top of the previous $3.2B to address the cost of living, including $634M  for improving the quality of housing. As a part of this initiative, the government plans to build around 1,500 new units of affordable housing and complete the delivery of 3,300 units announced in the AccèsLogis program has mentioned in the previous budget.

This initiative is expected to help low-income households pay their rent and improve the overall quality of housing in the province. For CRE investors, especially for the multifamily asset class, it remains to be seen if those measures will have a meaningful impact on current market trends and the upward trajectory of prices and rents.

Labour shortage across the whole of Quebec is another major challenge facing the market right now. Investors can feel it across retail assets and the ongoing delays in the delivery of new properties of all types on the market. 

For this reason, the government is investing $2.8B in education and worker requalification programs to help residents gain the skills and knowledge necessary to succeed in the changing economy. This investment could have a positive impact on the real estate market by alleviating some of the workforce shortage, as well as being a key factor in attracting businesses and driving economic growth.

On the other hand, a more qualified workforce will increase the pressure on an already strained rental market and keep pushing rental prices higher, especially in large urban centers. Given this assessment, multifamily will continue to be a winning asset class throughout the year in an investor’s portfolio. 

The government is also allocating significant funds toward stimulating the economy which will help drive further investment across all spheres of the real estate market. This includes $1.5B to support economic development in the regions and $2.2B to increase the productivity of the Quebec economy, including the new Quebec Research and Innovation Strategy 2022-2027. 

Government investment in innovation and research is critical for the long-term growth and success of any economy and maintain the global attractiveness of the province. To support this, the government is allocating nearly $1.5B to deploy the Quebec Research and Innovation Strategy 2022-2027, renew the Quebec Life Sciences Strategy, and support the development of critical and strategic minerals and innovation in the mining sector.

Commercial real estate investors can position themselves to take advantage of these announcements by aligning their investment strategy and fund allocation toward the asset class benefiting the most following each announcement. 

Investment in the Quebec economy, alongside new developments in research and development, especially in regions outside the Greater Montreal market, has the possibility of creating new opportunities for investors across the province while maintaining the position of the Montreal market as an anchor of growth and innovation. 

Overall, the budget announcement made by the government of Quebec includes several measures aimed at addressing the challenges facing residents and businesses by stimulating investment in the province but falls short to address concretely the housing crisis we are currently facing.