Quebec-An Investment Destination

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A French-speaking society in north-eastern North America, Québec is progressive and outward-looking. India’s broad-based, innovative economy is the main reason Québec opened an office in Mumbai in 2008. Dominic Marcotte, Consul and Director, Québec Government Office in Mumbai explains the investment potential of the real estate of this province of Canada. For the past 70 years, the Canada Mortgage and Housing Corporation (CMHC) has been the federalagency responsible for housing in Canada, including Québec. The Government of Québec has two public agencies devoted to the housing sector—the Société d’habitation du Québec (SHQ) and the Régie du bâtiment du Québec (RBQ). The SHQ, the main housing agency, is committed to providing Quebecers with appropriate housing conditions in keeping with their needs and financial resources. The RBQ is tasked with protecting the public with regard to the quality of construction work, building and facility safety, professional qualifications and the integrity of contractors and homebuilders. The RBQ is also responsible for regulating construction, safety and professional qualification standards. According to the CMHC, the demand for new single-detached homes in 2017 and 2018 should remain relatively stable. The number of new detached starts is expected to range 9,000 to 10,000 in 2017 and from 8,800 to 9,800 in 2018. Supply and demand for apartments should continue to grow. The number of multiple unit starts is expected to be between 27,300 and 28,500 in 2017, andthere will likely be an increase of approximately 1,000 units in 2018. The CMHC expects that sales of existing houses will be fuelled by job growth over the next two years. According to its studies (houses sold through a real estate agency), sales of existing houses should total somewhere between 75,250 and 81,250 in 2016, and shouldincrease slightly to between 77,000 and 83 000 in 2018. It also expectsa gradual tightening of resale markets, which will sustain price growth. The average resale price for single-detached homes in Québec shouldrange from $283,000 to $295,000 in 2017 and from $288,800 to $295,800 in 2018. [caption id="attachment_11215" align="alignnone" width="300"] Quebec, Canada -?? AUGUSTUS 21, 2010: Some typical houses from the old town and buildings in construction in the background in Quebec, Canada[/caption] As per the rental market report by CMHC principal market analyst Francis Cortellino, “The vacancy rate in the Montréal region remained stable at 3.9% in 2016. The change in the average rent, which currently stands at $760 a month, was around 2%.” A considerable portion of Québec’s GDP—the highest of all Canadian provinces—is devoted to R&D. The Québec and Indian markets offer a multitude of increasingly attractive business opportunities and potential partnerships in the areas of trade, culture, science, technology, education, and higher education. India is currently Québec’s fourth largest trading partner in Asia, and tenth in the world. Foreign investment in Montréal Montréal real estate market has a small proportion (between 4 and 8%) of its condominiums owned by foreign investors which were unoccupied in 2015. The same year, 40% of foreign buyers who purchased a condominium in the Montréal region did not take out a mortgage. For all buyers (Canadian andforeign combined), the proportion was 15%.The values of condominiums owned by foreigners in the central sectors of Montréal were generally higher than those owned by Canadians. Since the beginning of 2016, the number of foreign buyers in the Montréal region, while remaining limited, is higher than for the same period in 2015. The strongest growth has been among investors from China. Following the implementation of the foreign buyers tax in Vancouver on August 2, 2016, there may have been a very small shift in demand from Vancouver to Montréal. Québec City The Québec City CMA accounts for 9.8% of Québec’s population. It is the second most populous city in Québec after Montréal (49.1%). Economic development in the region, which encompasses historic Québec City, the provincial capital, is a factor favourable to demographic growth. According to a study released by development agency Québec International, development strategies targeting the knowledge economy, industrial diversification, greater involvement of the private sector and increasingly innovative practices have enabled Québec City to be proactive.It is the only metropolitan region in Canada to experience sustained economic growth for the past 25 years with real GDP of $34.3 billion in 2015 and annual growth of 2% over the past 10 years. According to Statistics Canada, $863 million was invested in the non-residential sector in the Québec City region in 2015. The previous yearwas exceptional, with total expenditures exceeding $1.7 billion. The non-residential sector in the Québec City region is clearly doing well. The Québec International study also reported that, between 2010 and 2015, an average of $958 million was invested annually, an increase of 6.8% over the previous period. This upward trend is expected to continue over the next five years given the announcement of several major projects. Québec City housing market The Québec City housing market performed slightly better than expected in 2015. Housing starts were up 22.3% to 5,442 units, putting an end to two consecutive years of decline. The resale market continued to grow in the region, with 6,623 sales of existing properties, an increase of 2.4% over 2014. There was a considerable increase in housing starts last year due to the construction of new rental units. The residential housing stock grew by 4,155 apartments, a level of activity not seen in the region in 20 years. In terms of competitive advantages, the Québec City region is one of the most attractive in terms of business operating costs. The 2016 edition of the KPMG Competitive Alternatives study confirmed that Québec City once again ranks first among all cities worldwide with a population over 100,000 in mature markets for its competitive advantages. The biennial study reported that it costs 16.1% less to set up shop and do business in Québec City compared to the average American city. The Québec City region is currently home to 208 foreign subsidiaries operating in 250 establishments. Coming primarily from North America (139 subsidiaries, 66%), Asia (11 subsidiaries, 5%), and Europe (58 subsidiaries, 28%), these companies contribute actively to the vitality of the regional economy. Québec’s advantages for India Aside from the real estate sector, Québec encourages businesses by offering attractive tax breaks, which help reduce operating costs considerably. With a tax rate of 26.9% in 2016, Québec boasts one of the most competitive rates anywhere in North America for manufacturing and non-manufacturing companies alike. Québec is open to private investment, a key driver of economic development. Companies from all over the world, including India, are encouraged to invest in Québec expertise and talent, and take advantage of the many benefits available to them here. A number of Indian companies are already active in Québec, primarily in the mining, information and communications technology, aerospace, biotech and pharmaceuticalsectors. For example, Indian-owned ArcelorMittal operates the largest active iron ore mine in Québec, while Tata Steel Minerals Canada Limited has been running the Direct Shipping Ore mining project since 2015, an investment project worth over $1.5 billion. In partnership with Montréal International, Québec International and Investissement Québec, the government has made it a priority to attract foreign investment. So now is a great time for more Indian investment in Québec’s real estate sector.