Canada’s Construction Sector Navigates Challenges, Anticipates Slow Growth in 2024: Report
According to the latest findings from Arcadis’ 2024 International Construction Costs Index, Canada’s construction landscape is set for a subtle journey in the midst of evolving market conditions.
The 2024 Arcadis International Construction Costs Index, covers 100 major cities worldwide and provides insights into the global construction landscape. The index assesses twenty different building types across residential, commercial, and public sectors and offers a comparison of construction costs relative to Amsterdam, indexed against the USD.
Canada experienced modest economic growth in 2023, with GDP rising by 1.1 per cent, marking the third consecutive year of expansion, according to Arcadis.
However, this growth rate, the slowest since 2016, with the exception of the pandemic year, underscores the challenges faced by the construction industry. This has resulted in the cities of Toronto, Vancouver, Calgary, and Montreal falling within the top 50 most expensive places to build across the globe.
Arcadis noted that in 2024, Canada’s construction sector is poised for cautious optimism, with several bright spots on the horizon. The report predicts continued slow growth as near-cyclical high-interest rates temper investor sentiment as well as moderate expectations.
The housing shortage, however, remains a critical issue across the country, driven by federal immigration policies fueling population growth and consumer demand. To address this shortfall, the federal government has allocated $6 billion CAD to the Canada Housing Infrastructure Fund, which underscores the urgency of investing in critical infrastructure.
Arcadis noted that population growth also fuels demand in healthcare, education, and infrastructure projects, with significant investments underway.
Canada’s largest infrastructure project, the addition of 1,000 km of new rail track for high-speed rail services between Quebec City, Montreal, Ottawa, and Toronto, is expected to advance with a contractor appointment slated for this summer.
Major projects such as Dow’s US $6.5 billion net zero petrochemical plant in Alberta and possible expansions by auto manufacturers such as Honda signal continued growth and investment in the industrial segment.
“Overall, the construction market in Canada is one of opportunity with some sectors requiring a bit more caution and patience, notably residential. Looking ahead, the availability and capacity of skilled labor to participate in construction projects will be a growing constraint,” said Audrey Jacob, city executive, Toronto & business area director, places.
“The key priority for clients is delivering an operational facility on time, but in a resource-constrained market, existing supply chains and delivery models might not be adequate to provide the assurance needed to protect multi-billion investments. This will place a premium on productivity-led design, procurement, and construction to deliver projects at scale – and project teams need to be ready to adapt,” said Martijn Karrenbeld, global director for industrial manufacturing at Arcadis.