Canada

Over 1 In 10 Dollars Made In Canadian Real Estate Goes To Foreign Companies

Over 1 In 10 Dollars Made In Canadian Real Estate Goes To Foreign Companies

Canadian real estate companies are making a smaller share of the real estate pie. The 2015 numbers were finally released under the Corporations Returns Act, showing a breakdown of foreign controlled interests in the Canadian economy. These numbers show increasing control by foreign companies in the categories of real estate, rental, and leasing.

Operating Revenues At Foreign Firms Were Over $14 Billion

Operating revenues for real estate related industries hit an all-time high for foreign and Canadian firms. Foreign firms saw $14.21 billion of revenue in 2015, a 34% increase from the year prior. US companies took the lion’s share of foreign revenue, capturing $11.5 billion of those dollars. To contrast, Canadian companies took in $86.78 billion in revenue.

This means Canadians are making the smallest cut of the real estate revenue pie that they have made in the last 14 years. Foreign companies captured 14.1% of total revenue. Canadians firms captured 85.6% of revenue. The last time it was this low was in 2001, when Canadian firms only captured 82.4% of total revenue. Foreign firms are gaining major ground.

Operating Profits At Foreign Firms Were Over $2.3 Billion

Foreign real estate firms are also gaining ground with their share of the profits. In 2015, $2.305 billion in profits were claimed by foreign firms. Of those, $1.9 billion were to US firms. To contrast, Canadian firms made $20.81 billion in profits.

These numbers show that Canadian firms are losing ground in terms of total profit share. Foreign firms captured 10% of all profits, leaving Canadian companies with the remaining 90%. This is the lowest number since 2011, when Canadian companies took in 89.3%.

The numbers aren’t all that bad for Canadian firms, but they do show that they’re increasingly losing ground to foreign firms – mostly American. Keep in mind these numbers are also from 2015 filings, which is before most people knew foreign companies were playing a stronger role in Canadian real estate. In my humble opinion, these numbers are likely to be much higher in the next round of numbers.

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4 Comments

  • Reply
    Justin Thyme 4 days ago

    There is much more that needs to be known about this data.

    It doesn’t address the question of ‘Who owns the American firms?’

    If a non-American entity owned an American firm, and then did business in Canada, it would look as if the money was going back to America. Just because it is registered in America, doesn’t mean it is owned by Americans.

    I am thinking of the Ontario Teachers’ Pension Plan. It uses companies it owns 100% as holding companies, that buy interest in foreign real estate firms, but eventually the profits return back to Canada. Cadillac Fairview comes to mind.

    https://www.cadillacfairview.com/en_CA/portfolio-map/investments.html

  • Reply
    Ahmed 4 days ago

    This also underestimates the number of firms being held as a proxy for foreign firms. It’s a common accounting trick for a US firm to establish a Canadian company, then have that company pay consulting fees to an offshore haven. In the US, the taxman would crackdown on offshoring loopholes. In Canada, it’s perfectly legal. Why do you think you booked your Uber ride with Uber of the Netherlands this morning?

    • Reply
      Michael Z. 4 days ago

      It’s unfortunate that Canadians have been convinced that globalization and free-trade agreements benefit them. Sure, stuff gets cheaper – but your jobs and tax revenue goes higher. In the circumstance of a free-trade agreement, the highest income earners and corporations are free to move into lower tax jurisdictions.

      Want an increase in the quality of life? We’ll just raise taxes. Sure on paper the 1% pays more, but only on the local tax rate. This in effect means that middle class likely pays more in taxes than the wealthiest percentage. All for…3 cents off of every dollar your retailer would have to pay? lol.

      There’s a reason the middle class never jumps in to the upper, they lack basically knowledge of finances.

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