Co-author: Liam Razzell
Tourism
The good news is that this crucial sector of Victoria’s economy has bounced back from its deep pandemic slump. Among a host of kudos, Victoria was recently named the best city in the world — that’s world — by the passionate readers of Condé Nast Traveler.
By the numbers, each year Greater Victoria draws some three million visitors who contribute more than $2 billion both directly and indirectly to the local economy. Cruise ships alone disembark more than one million visitors to Ogden Point. Tourism employs some 20,000 locals in everything from hotel services to restaurants to attractions like The Butchart Gardens and the Royal BC Museum, Victoria’s top two attractions.
Destination Greater Victoria (the Greater Victoria Visitors & Convention Bureau) is the official not-for-profit destination marketing organization, working in partnership with more than 950 businesses and municipalities in the region. Its CEO, Paul Nursey, is widely regarded as one of Canada’s top tourism policy minds, with 28 years of management and leadership experience that includes the Canadian Tourism Commission and Tourism Vancouver.
One of his organization’s most ambitious projects is a master plan, which he expects to release in early 2024, that will predict traffic, events, conferences and the infrastructure needed to cover it all.
Meanwhile, Nursery says, “The first six months [of 2024] are heaving. A key trend we’re seeing is that business conferences are booming — fully recovered. It’s the human desire to connect rather than work remotely. This is good for us because conferences are typically held in the off-season and book a year or two in advance. Vacation tourism is a last-minute thing.”
He adds: “One positive did come from the pandemic. Locals, especially local businesses, appreciate tourism more than ever.”
Tourism predictions
There will be an increasing emphasis on sustainability, which Nursey calls “going clean and green.” From January 21 to 24, 2024, Victoria will play host to Impact 2024, a global summit on travel and tourism sustainability with topics such as the circular economy and women entrepreneurs in tourism.
YYJ will expand and improve to reconnect routes that were lost during the pandemic. The airport authority has an ambitious plan to extend runways and increase amenities. There’s even a 129-room hotel planned for early 2025. In fact, Nursey says, there are five new hotels in the pipeline locally.
Indigenous tourism will be an important trend. The local, Indigenous-owned Explore Songhees is one such operator, providing walking and canoe tours of Victoria’s Inner Harbour through the lens of history, truth and reconciliation.
Explore Songhees, which provides canoeing and walking tours of the Inner Harbour, is part of a growing trend in Indigenous tourism.
Real Estate
First, the bad news. According to a new survey by online mortgage marketplace ratefilter.ca, Canadians spend an average of 37 per cent of their pre-tax income on housing, with 62 per cent of us exceeding the Canadian Mortgage and Housing Corporation guideline of spending no more than 30 per cent of income on housing.
The good news for Victoria homebuyers is that inventory is surging in some of the region’s most attractive markets. Likewise, according to CMHC, six per cent of homeowners say they plan to sell in the next 12 months, and 20 per cent in the next five years. But rising mortgage rates are preventing buyers from taking advantage of this higher inventory.
Clay Jarvis is the mortgage and real estate expert for NerdWallet Canada; Graden Sol is the chair of the Victoria Real Estate Board. Here are some of their predictions for buyers, sellers and renters in the year ahead:
Buyers
“Look at the markets that are doing well — Alberta, Saskatchewan, New Brunswick, Newfoundland — theyʼre places where buyers can use low home prices to absorb high mortgage rates,” says Jarvis. “Buyers in B.C. donʼt have that luxury, and wonʼt in 2024.”
The last time the B.C. real estate market picked up, in late spring/early summer of 2023, buyers could still lock into fixed rates south of five per cent. Once rates get that low again, buyers could see the market turn on a dime. When will that be? The BC Real Estate Association recently released its rate forecast, and it doesn’t see rates sinking below five per cent before late 2024.
That doesn’t mean the market will remain on ice for an entire year. Demand is too high, the fear of missing out is too strong and well-capitalized buyers will find ways to adjust. First-timers, though, will see their share of the market continue to dwindle.
Sellers
Sellers could find themselves in an awkward situation while mortgage rates stay high. “High rates don’t just make it harder for homeowners to sell, they also make it harder to purchase that next property,” says Sol. But that means homeowners also have to prepare for selling into a buyers’ market, which Victoria hasn’t seen in a long time. “They’ll have to price their properties for 2024, not 2021,” says Jarvis.
Renters
The provincial government is bending over backward to increase rental supply by passing the Housing Supply Act, increasing secondary suites and clamping down on short-term rentals. But those measures aren’t likely to make renting significantly more affordable in 2024. There’s just too much demand for so little supply.
Renting vs. buying: Which is better?
Likely most people who could afford to buy a home and not sacrifice their entire lifestyle to make it happen wouldn’t think twice. But buying a home at today’s prices is a colossal challenge for many people who have to plough their life savings into a mortgage, then scrimp and save for 25 years to pay it off. It makes sense that they find renting more comfortable.
At the same time, owning a home is also a reliably appreciating investment. There arenʼt as many financial benefits to renting, especially if youʼre paying through the nose every month.
If renting does save a person money, then some of those savings should be put to work in the form of long-term investments — GICs, bonds, RRSPs, TFSAs or, to keep the dream of homeownership alive, a First Home Savings Account.
Real Estate predictions
Mercifully, supply is starting to build in Victoria, which should make finding a new place to live in 2024 a bit easier, and may help soften prices a little later in the year.
Mortgage rates have flattened, and are expected to dip slightly in the second half of 2024.
With Canada’s ambitious immigration targets, and the high number of renters who can’t afford to purchase homes, the pressure on Victoria’s rental market is only going to increase.
Local Government
All politics is local, and local politics directly affects business on every level from building permits to environmental codes to customer parking to staff housing.
Maja Tait knows this well. She is the longest-serving mayor of Sooke, vice chair of the Capital Regional District and serves on a dozen other committees, from Indigenous treaty advisories to regional transportation. Last summer, Tait officially became the federal NDP candidate for Esquimalt-Saanich-Sooke. So when she discusses local and regional issues in Greater Victoria, she knows whereof she speaks.
A particular interest of Tait’s — and a burning issue in Greater Victoria — is housing. Through the Housing Supply Act, under direction from the Province, several municipalities are expected to increase the local housing supply in 2024, especially affordable housing, the shortage of which has been a significant factor in the ongoing labour shortage. Tait says that, while the targets and details have not been released, councils like Sooke’s have jumped the gun by streamlining the approval process, particularly building permits.
But Sooke is only one of the 13 municipalities in the Capital Regional District, the regional government that also oversees 11 First Nations territories, three electoral districts and some 440,000 people, including those in unincorporated communities like Salt Spring Island.
According to the CRD, common issues voiced include: housing, health care, agriculture, sustainability, homelessness, preservation, transportation and quality of life. But the CRD also deals with everything from algal bloom on Elk Lake to playground restoration. The authority has no fewer than 30 capital projects on the go for 2024, and some 32 initiatives.
Among them is the revitalization of the downtown core, starting with a facelift for Centennial Park Square. The work would be phased and begin with renovating the central plaza, and replacing the fountain and monoliths with a new splash park and landscaping. The initiative is a priority in the plan to update parks citywide.
There is also the proposed redevelopment for Village on the Green, a Capital Region Housing Corporation complex located in Fernwood. It would see the number of homes on site increase from 38 to 140 units of affordable housing, at a proposed budget of $65 million.
And the CRD is developing the Foodlands Access Program to support farm businesses. Historically, the Saanich Peninsula was the breadbasket of Victoria. But local food and agricultural production faces challenges, including the loss of farmland, cost of operation, aging farmers and rising food prices. CRD is developing a Foodlands Access Program to support young farmers by facilitating affordable access to productive farmland. `
B.C. Minister Brenda Bailey’s ambitious portfolio is Jobs, Economic Development and Innovation. She says her ministry is “charged with keeping our economy strong.” She points to two indicators in particular. “In the face of inflation our GDP is the strongest in Canada, and unemployment is 5.4 per cent.” In addition, B.C. has become the technology capital of Canada, and is tied with Austin, Texas, in North America.
On the jobs front, Bailey references the Future Skills program, funded at $450 million over three years. And the Province’s recent Housing Act, she says, is a response to the current crisis in real estate prices and availability by streamlining the permitting process and clamping down on short-term rentals.
In a recent study by Coast Capital Savings, Victorians say that the most important issues facing Greater Victoria are: housing (69 per cent); the cost of living (also 69 per cent); and health care (64 per cent). (The top-ranked features were our natural environment, climate and parks.) So, based on all of the above, the conclusion for the “best city in the world” is this: Don’t rest on its laurels.
Local Government predictions
Housing will be the top priority for government in the year ahead — not just locally, but provincially and nationally — with health care and the cost of living close behind.
“Collaboration” will be the catchphrase of 2024, with governments at all levels consulting and/or partnering with local groups such as Vancouver Island Economic Alliance, South Island Prosperity Partnership and the area’s 11 First Nations to leverage resources and talent.
Despite talk of amalgamating some or all of Greater Victoria’s 13 local municipalities, it won’t happen in 2024, or anytime soon. Interestingly, some Victoria icons such as the Royal Jubilee Hospital and UVic already straddle more than one community.
Technology
From gaming to aerospace to software development, tech is Victoria’s largest private sector industry. More than 1,000 local companies generate over $4 billion in annual revenue. Among the companies in operation here, some have seen incredible success.
In 2021, for example, Canon bought semiconductor producer Redlen for $341 million. And three companies — background screener Certn, cloud solutions provider Premier Cloud and solar-power lighting manufacturer First Light Technologies — ranked on the Globe and Mail’s list of Canada’s top-growing businesses. Certn alone had a staggering 2,000-per-cent growth in 2023.
But despite the success of Victoria’s tech sector, it faces obstacles, some of which aren’t unique to the industry. “I do hear from companies that it is harder to attract and retain talent than it used to be because of [housing] affordability and availability,” says Dan Gunn, CEO of the Victoria Innovation, Advanced Technology & Entrepreneurship Council (VIATEC), which advocates for some 360 tech companies on the South Island.
Overall, however, he thinks the industry is in a good place. Compared to tech hubs like Vancouver, “We’re a bit more of a slow-and-steady-wins-the-race community,” says Gunn. “We’re not about chasing the flavour of the day; we’re about building strong, capable, world-crushing companies.”
And Gunn has high hopes for tech here: “I think we’ll be as much as twice the size as we are by 2030, putting us over $10 billion in revenue.”
Though VIATEC hasn’t released an economic impact study since 2018, it has seen strong indications that the industry is on track to reach its ambitious 2030 goal of $10 billion. Overall, member companies’ valuations, employee numbers and revenues have risen dramatically even during the pandemic.
The number of business acquisitions has also increased, and deals are bigger than ever. “It used to be that if you sold a company for $5 million, that was a big deal,” says Gunn. “Now we’re seeing companies sell for half a billion dollars.”
Tech Predictions
The local tech community expects to grow by at least $500 million in 2024, and close to $5 billion in total revenue.
Artificial intelligence will become mainstream in 2024. You may ask: “How will AI impact my business?” For starters, it can help design and produce products, and provide more accurate accounting and financial data.
As a culture, tech is the sector that depends most on hybrid and remote workers. In 2024, about two-thirds of programmers, designers and producers will work from home (or a beach in Mexico).
Construction
The construction industry has been a pillar of the Canadian economy for more than a century. Today, B.C. has close to 150,000 small and medium enterprises in the industry, employing about a million workers. However, the construction sector has been slow to embrace change, says Rory Kulmala, CEO of the Vancouver Island Construction Association. As a result, it’s missing out on opportunities and exposing itself to competitive threats.
Some other challenges the sector will face in 2024:
What and where to build: The COVID pandemic has permanently changed work patterns. Demand for commercial real estate will continue to decrease as remote and hybrid work become the norm. Meanwhile, people are seeking more space where they live to accommodate home offices and aging family members. And layouts may need to be rethought to make permanent space for physical distancing.
Adapting to climate change: According to the World Economic Forum, construction is the planet’s largest consumer of resources and raw materials. Buildings are responsible for 25 to 40 per cent of global energy use and therefore are a huge source of greenhouse-gas emissions.
Sustainability will be an important focus for the industry in the future, including the use of new materials and processes to reduce environmental impacts. At the same time, the industry will have to make buildings and other infrastructure more resilient to withstand the higher frequency of natural disasters caused by climate change.
Incorporating new technology: The construction industry has been hesitant about adopting new technologies and, as a result, productivity has stagnated. Incorporating more technology will not only enhance quality and safety but also help to mitigate labour shortages. Small-and medium-sized businesses with limited resources can gain access to technology through partnerships with larger companies or by sharing equipment with other smaller firms.
As with manufacturing, construction companies will have to seek out employees with the skills to work with new technologies, and retrain their current workers. This is a tough challenge because the competition for tech talent will be particularly high in 2024.
The shrinking workforce: Finally, there is the matter of a shrinking workforce due to retirement and the lure of “softer” industries. In the next year, thousands of skilled workers will leave the industry. Organizations like the Vancouver Island Construction Association and institutions like Camosun College believe they have an answer: more women in the trades. At present, less than five per cent of skilled workers on job sites are women. Karen Dearlove, executive director for the BC Centre for Women in the Trades, would like to see it double in 2024.
Construction Predictions
Because of retiring skilled workers, more and more young people — and women — will enter the trades next year, but it will take them up to 10 years to become truly skilled.
More municipalities will look to places like Langford as an example for its streamlined permitting process, cutting construction schedules from months to weeks.
In 2024, more builders large and small will embrace technology — from 3D printers to drones — to compensate for the dwindling pool of skilled workers.
