Real Estate Industry Analysis: Canada

1. MORTGAGE BROKER BUSINESS IN CANADA
GLOBAL BUSINESS ENVIRONMENT
Submitted to:
Prof. Jagdish Shettigar
Dr. Monika Jain
Submitted by:
Akanksha Verma
20DM014

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ACKNOWLEDGEMENT
I am grateful to my guide Prof. Jagdish Shettigar and Dr. Monika Jain, for their
exemplary guidance, monitoring and constant encouragement throughout the
course of this project.
I also take this opportunity to express a deep sense of gratitude to BIMTECH, for
providing valuable information and resources.
Lastly, I also extend my heartfelt thanks to the almighty, parents and friends for their
constant encouragement without which this assignment would not have been
possible.
Akanksha Verma.

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TABLE OF CONTENT
Table of Contents
Chapter 1: Country Overview.................................................................................................4
1.1 Canada’s economy.................................................................................................................. 4
1.2 Real Estate sector in Canada....................................................................................................4
1.3 Causes of unease .................................................................................................................... 5
1.4 Policy approach for Real Estate sectorin Canada ......................................................................6
1.5 Government Incentive pertaining to Real Estate industry .......................................................... 6
1.6 Supply and demand in Canadian Market................................................................................... 7
1.7 Factors that Influence Supply...................................................................................................8
1.8 Competitors in industry...........................................................................................................9
Chapter 2: Business Proposal ............................................................................................... 10
2.1 Goals.................................................................................................................................... 10
2.2 Mission................................................................................................................................. 10
2.3 Summary of the market analysis ............................................................................................ 10
2.4 Market segmentation............................................................................................................ 10
2.5 Keys to Success..................................................................................................................... 11
2.6 SWOT Analysis...................................................................................................................... 11
References.......................................................................................................................... 12

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Chapter 1: Country Overview
1.1 Canada’s economy
Canada's economy is a highly developed market economy that is the 10th largest GDP in
Canada Nominal GDP and 24th largest PPP GDP in the world. As with other industrialized
countries, the country's economy is dominated by the service sector. Canada ranks fourth
highest total estimated value of natural resources that is the third largest proven oil reserve
and the fourth largest oil exporter. It is also the fourth largest exporter of natural gas.
Canada is known as an "energy superpower".
The dependence on natural resources has various effects on the Canadian economy and
Canadian society. Although the manufacturing and service industries are easy to
standardize, the natural resources vary greatly from region to region. At the same time the
vast majority of the resources are exported, making Canada tightly integrated into the
international economy. The United States is by far Canada's largest trading partner. In 2009,
73% were of the exports went to the US and 63% of Canadian imports came from the US
States. The United States remains Canada's largest foreign investor and favourite travel
destination for Canadian overseas investment.
1.2 RealEstatesector in Canada
Based on various surveys and interviews with industry players, it has been determined that
there is a sense of unease in the Canadian real estate market. The causes of discomfort
include changes in customer expectations, preferences, and behaviour; the need to
embrace technology and adapt to broader trends like collaboration and sharing, economy;
political challenges and geopolitical uncertainty; and emerging business challenges caused
by labour shortages, lack of skills and lack of cybersecurity.
Many of these business challenges are not new, but the pace of change is accelerating.
While the industry is clearly responding to these disruptions, and the scale of the changes
brings the survival of many organizations at stake. It's time for a new approach that
captivates the customer experience and expectations are at the centre of all business
activities. The common theme in offices, retail, and life is that it's no longer about space.
While the Vancouver and Toronto real estate markets continue to lead Canadian cities in
terms of investment and development prospects, every region has its own opportunities
and challenges.
From the various classes of commercial real estate to the housing market, the impacts of
changing customer habits and expectations are reverberating across the property types.

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 Industrial real estate
 Reserved rental apartments
 Office
 Retailer
 Single family home
 Co-ownership
If we talk about the current scenario, COVID-19 is accelerating change in the Canadian real
estate market as the urbanization trend enters a new phase, commercial real estate
continues to disrupt, remote working softens the prospects for offices, and e-commerce
puts more pressure on industrial estate.
1.3 Causesof unease
Changing customer expectations, preferences, and behaviour
While the concepts of the shared economy such as collaborative work and
coexistence are showing new flexibility in people's view of real estate, businesses
need to adjust their developments and spaces to satisfy them by offering the high-
quality amenities and services that customers are looking for.
Technological pressures
Changing customer trends brings the expectation of technology-equipped spaces.
The integration of property technology (proptech) solutions is a top priority for
industry players looking for ways to better meet customer needs and increase
efficiency. In general, technology has both positive and negative effects on business
operations and physical space. The e-commerce boom is reducing the demand for
traditional retail space, but increasing the prospects for industrial real estate and
facilities to meet last mile delivery needs, while the growth of the technology sector
is a major contributor to the strong absorption of new office developments.
Policy challenges and uncertainty
From government interventions aimed at addressing housing affordability to
geopolitical events, interviewees and survey respondents are seeing the impacts on
their businesses and are watching out for developments that could further disrupt
the industry.
Rising business threats
Labour shortages, skills gaps, and cybersecurity vulnerabilities are just some of the
challenges requiring the industry to build new capabilities.

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1.4 Policyapproach forRealEstatesector in Canada
 Policy on Management of Real Property
This policy came into effect on November 1, 2006. The policy ensures the sustainable and
financially responsible management of real estate throughout its life cycle to support the
profitable and efficient execution of government programs.
 Objective
The objective of this policy is to ensure real property is managed in a sustainable and
financially responsible manner throughout its life cycle, to support the cost-effective and
efficient delivery of government programs.
 ExpectedResults
The expected results of this policy and its associated directive and standards are:
o effective and efficient management that enables program outcomes and serves
o broader government objectives;
o financially responsible management that maximizes the long-term economic
o advantage to the Crown and provides best value to the Canadian taxpayer;
o barrier-free access and use of federal real property and services that ensures
o inclusiveness and non-discrimination;
o cultural and environmental stewardship that contributes to the preservation and
o protection of their heritage and the environment; and
o fair, open and transparent transactions that ensure equitable treatment
 Consequences
Based on the evaluation of the department management's performance, the Secretary of
the Treasury Board will make appropriate recommendations to the Deputy Director of a
department and the Treasury Board. Recommendations to Treasury Board ministers could
include measures such as increasing the limits on the approval of transactions to recognize
better performance or capacity or vice versa, reducing approvals or withholding proceeds
from the sale or transfer if the performance does not meet the requirements of this
directive and related policy instruments
1.5 GovernmentIncentivepertainingto Real Estateindustry
First-Time Home Buyer Incentive
 Eligibility Criteria

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o Your qualifying household income is less than $120,000. Qualifying income
includes money you earn from investments and rental income, not just your
job(s).
o You have at least the minimum down payment. The minimum down payment is
5% of the first $500,000 of the home’s purchase price, and 10% for any amount
above that. However, the total amount you put down (including the FTHBI
amount) must be less than 20% of the home’s purchase price. This maximum
down-payment rule also assures that the FTHBI applies only to CHMC mortgage
default-insured mortgages.
o Borrowing less than four times your qualifying income. Since the maximum
qualified income is $ 120,000, each qualified buyer can borrow (and still claim
the incentive) a maximum of $ 480,000 - including mortgage, mortgage
insurance, and FTHBI amount. Low-income individuals who wish to apply for the
incentive can only borrow less. This would be difficult because the average home
price in Canada was $ 505,463 in June 2019, according to data from the Canadian
Building Association.
1.6 Supplyanddemand in CanadianMarket
Factors that Influence Demand
In real estate, demand is how many people want to buy homes. A variety of factors influence
this.
 Interest rate
Interest rates play a key role in the demand for housing. If all things are the same, then the
lowest Interest rates, the higher the demand for real estate. Low interest rates mean that the
cost of borrowing is lower and buyers can afford to borrow more with a Mortgage and
therefore can spend more on a home. The opposite is also true; High interest rates mean the
cost of borrowing is higher and buyers can afford to borrow less on a mortgage and therefore
spend less on a home.
 The economy
The general economy and the labour market alsoplay a key role in the demand for Landscape.
When the economy is doing well, the demand for real estate tends to be higher. However,
when the economy is in trouble, the demand for real estate tends to be lower. The same
applies to the labour market. When the job market is good, there is demand for real estate
tends to gain weight; However, when the job market is bad, the demand for real estate falls.
 Affordability

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Affordability is the third factor to consider. It just means how affordable it is in real life The
property is in the city or township of your choice in terms of your pay check. At home Prices
are high in relation to income, while demand tends to be lower, while real estate prices are
high are low in relation to income, the demand tends to be higher. Rent affordability also
plays a role in property demand. When renting is a lot Cheaper than owning a home, people
can choose to rent it instead of owning it.
 Immigration
Immigration also affects demand for real estate. The more immigrants there are in a given
city, the demand for real estate is all the greater. Become a Canadian citizen and permanent
resident, an immigrant must earn a certain amount Number of points ". This means they have
a bright future, and likely to get one a decent income that will help and stimulate them to buy
in the real estate market Demand for real estate. Foreign buyers also influence the demand
for real estate. These are foreigners Look for a safe place to park your money outside of your
home country. Although You may not plan to live in Canada. Buying property here means
there is more the demand for real estate and supply is also decreasing. While a tax on foreign
buyers has been introduced in some areas, foreigners with deep pockets may not be afraid to
pay it may not affect demand that much after all.
 Mortgage qualifications
In recent years, the government has tightened its mortgage approval rules. While You could
get a40-year payback mortgage, you can't. More. Now the maximum cushioning for someone
who poses less more than 20% is 25 years while the maximum payback is 30 years for
someone who bets more than 20%. When you are making a decent income and buying at an
affordable price Real estate market, that might not be a problem. But if you like to buy in a
city Toronto or Vancouver, where property prices are higher, can leave you locked out of one
Mortgage the property that you are likely to buy. The mortgage stress test also affected the
demand for housing. When you buy one at home, you must qualify for the highest interest
rate on your mortgage plus 2% and the bank of Canada's five-year benchmark rate (currently
5.19%). This essentiallyreduced the purchasing power of home buyers around 20% compared
to before the stress test entered forcibly.
1.7 FactorsthatInfluenceSupply
 Active records
Active listings play a key role in real estate offerings. The most active ads mean There are
more homes for buyers to choose from. But when the active offers are small, there are fewer
houses to choose from. a neighbourhood You can only have a house or two for sale. Less
active ads and higher demand for real estate, this means that houses are more likely to sell
for more.

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 New houses
There are two main types of houses: existing houses and new houses. The new houses are
New build houses. When there is a mismatch between the demand for housing and Supply to
new homes can help fill the void. However, there must be enough new housing. designed to
meet demand. When the scarcity of usable land and the red government Tape is on the way,
new homes under construction may not be enough to keep up with demand, which leads to
higher property prices.
 Permits
They influence the supply of housing in new housing construction. Yes, there are many
Government intervention and it takes a long time for new homes to be brought to market
there tends to have a lower supply of housing, which means that property prices tend to be
higher. However, if the government simplifies the process of obtaining a permit, then it will
There are usually more houses out there and so prices tend to be lower.
 Land use
The country also plays an important role. Land use determines whether or not you can build
residential buildings Commercial real estate there. It also specifies the density, height of the
buildings and Types of real estate such as houses, townhouses, or condominiums. between
land use and demand for new homes this can lead to a shortage of Houses and an increase in
real estate prices. Lack of land can also lead to a higher house Prices.
1.8 Competitorsin industry
List of the Top Canada Real Estate Services
 ReMax Ultimate Realty Inc.
 CAPREIT Apartments
 Wealthsimple
 Onni Group
 Dream
 MaxWell Realty Canada
 Macdonald Realty
 Westbank Corp.
 Amacon
 Pinnacle International
 Canada Lands Company
 Harvey Kalles Real Estate
 Lending Loop

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Chapter 2: Business Proposal
2.1 Goals
Realty Avenues offer comprehensive mortgage brokerage services. Realty Avenues focuses
on providing personalized and specialized services to meet the specific needs of each client.
The main goals of our company are:
 Take advantage of real estate investment opportunities available in Vancouver's fast-
growing neighbourhood.
 Develop a strong corporate identity in our specific target market sector.
 Become one of the leading brokerage companies in the region by our third year of
operation
 Achieve a positive return on investment in the first 12 months.
2.2 Mission
Realty Avenues provides high quality mortgage brokerage services for customers of the
company. Our goal is to offer our customers fair mortgage rates reasonable prices to keep
our customers up to date at all times. We will become friends and mentors for our customers
as well as high quality service. Ultimately, Realty Avenues offer their customers excellent
value for money and fair reward for its owners and employees.
2.3 Summaryof themarketanalysis
Due to the strengthening of the area's economy and lower interest rates, more home buyers
today are looking to purchase homes. These changes in attitudes of home buyers are a
tremendous boost to real estate firms. Residential construction is booming. We are poised to
take advantage of these changes, and expect to become a recognized name and profitable
entity in the city's real estate market. We chose to locate our office in the area of most
revenue potential and where we have close connection to dominant real estate firms. Our
targeted market area, the Vancouver area, shows stability and growth.
2.4 Marketsegmentation
The home buyers that Realty Avenues will be serving can be divided into two groups:
 First-time homeowners: A bulk of the new construction in the Old Town section of the
city is directed towards first-time homeowners.

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 Residential refinancing: If the requirement is for purchasing, construction, re-
modelling, debt consolidation, investment properties or refinancing, we have
programs available to service those with good and bad credit.
2.5 Keysto Success
 Tap into a variety of information sources, to truly understand what your customers
want.
 Embrace customer personalization to take our growth to new levels. Also, think about
our supply chain. Which parts do we want to own and serve directly, and which can
we assign to someone else to undertake on our behalf?
 Try to minimize the number of layers between our company and the end consumer so
that we do not lose control of an important asset.
 In addition, explore the ways that joint ventures and partnerships can help us explore
new market opportunities.
2.6 SWOTAnalysis
The industry is exposed to the following threats and opportunities:
 The value of residential construction is an indicator of the level of investment in, and
values of, new and existing residential structures. Higher investment in residential
construction boosts housing prices and indicates greater sales activity. This increases
commissions for brokers and agents, benefiting industry revenue. However, the
value of residential construction is expected to decline in 2019, making it a potential
threat to the industry.
 Population growth bolsters demand for housing, which pushes up housing prices and
associated industry commissions and brokerage fees. Consequently, population
growth generally leads to higher industry revenue and profit. The population of
Canada is expected to grow in 2019, representing a potential opportunity for the
industry.

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References
https://www.pwc.com/ca/en/industries/real-estate/emerging-trends-in-real-estate-
2021/evolving-customers.html
https://clutch.co/ca/real-estate
https://www.realtor.ca/en
https://www.bplans.com/mortgage_broker_business_plan/appendix_fc.php