The Bull Case For Canada

[00:00:00] Welcome to The Canadian Real Estate Investor, where hosts Daniel Foch and Nick Hill navigate the market and provide the tools and insights to build your real estate portfolio. There has seemingly been a lot of negative sentiment about Canada lately. From the political drama to the cost of living and the housing crisis and more, the list seems to go on.

[00:00:26] And sadly, that seems to have had an impact on many Canadians and how they feel about their country, which is kind of negative. But you know what? It's always easier to be negative than it is to be positive because of a phenomenon called negativity bias, where our brains are naturally wired to pay more attention and remember negative experiences more readily than the positive ones. I definitely have that.

[00:00:57] There is no denying that things are pretty tough right now. It's all over the news and social media and I mean, I'm among the rage farmers out there who post a lot of it and people are eating it up. But what usually happens is that the most difficult or challenging moments in our lives or our careers often occur just before a positive change or a big improvement happens.

[00:01:24] Ah, yes. The old, it's always darkest before the dawn, as they say. Yeah, I mean, we need perseverance through these tough times and that hope and grit and will to believe that better days are ahead. It's easy to make a bear case for Canada right now and harp on the negative. But here on the show, we don't just do the easy thing.

[00:01:48] Did you know that Canada has the world's third largest oil reserves with over 170 billion recoverable barrels? Yet, that's just the beginning of its resource wealth history. And with global data center power demand projected to increase by 165% by the year 2030, could Canada's abundant energy resources and cold climate make it the Silicon Valley of the AI era?

[00:02:17] Beyond the clickbait headlines and housing markets, what emerging sectors in Canada are poised for explosive growth and things that most investors haven't even caught on to yet? And what positive changes are we seeing in the housing sector that present major opportunities for investors and average Canadians alike?

[00:02:38] Welcome back to the Canadian Real Estate Investor Podcast, where we will be diving deep into, for the first time ever, the bull case for Canada. A nation that is far more than just maple syrup, poutine and hockey, even though we are damn good at it. From vast natural resources to cutting edge technology, Canada presents a compelling investment landscape that deserves your attention.

[00:03:04] And for savvy investors, the worse off the market is, the better the opportunities are to profit and not just profit, but provide real and meaningful value. That's the essence of contrarian investing. Nathan Rothschild, a 19th century British financier and member of the famous, somewhat infamous Rothschild banking family, is credited with saying the famous quote, quote, the time to buy is when there's blood in the streets.

[00:03:33] And I believe, Dan, the second part to that quote is, even when it's your own blood. We are going to cover today Canada's abundant natural resources, the opportunities they present, and look at how they impact the general economy, the labour market, and of course, real estate. We will also discuss technological innovation and AI data centres. The changing housing and lending landscape, as well as immigration and population growth.

[00:03:59] So, with all that being said, let's start where it seems natural, with the resources. Crude oil. Crude oil. I can help myself. Natural gas, minerals, lumber, seafood, wind, water, you name it, and chances are, we got it.

[00:04:20] After all, Canada is the second largest country in the world with an incredibly diverse array of landscapes and geologies from coast to coast to coast. Now, here in Canada, natural resources such as oil, potash, uranium, and wood are extracted to some of the world's most highest labour standards. Again, that's a super important piece.

[00:04:43] These extractive industries provide massive benefits to governments across the country through taxes and royalties and contracts, while also supporting millions of families through jobs and other associated economic opportunities.

[00:04:58] The major projects inventory, probably the easiest way to look at this, provides a snapshot of key natural resource projects in Canada that are either currently under construction or planned within the next 10 years. So, 24 to 2034. The inventory includes major projects that increase, extend, or improve natural resource production in Canada.

[00:05:23] And as of 2024, there are 504 major projects under construction or planned over the next 10 years in Canada, which surprised me, to be honest with you. There's a lot. Yeah, it's good. This is in energy, forest, and mining sectors, which have combined potential value of up to $632 billion. Yes, that's more than half a trillion dollars. Wow. Wow. Okay, so let's, you mentioned energy, forest, and mining sectors, Dan. Let's start with energy.

[00:05:52] Canada is viewed as a world leader when it comes to hydroelectricity, nuclear power, and hydrogen. And it's well positioned to benefit from not just domestic, but rising demand globally for all of those things. Currently, the energy sector here in Canada directly or indirectly supports 663,000 jobs and accounts for 10% of the Canadian economy.

[00:06:20] And as of 2024, there are 340 massive energy projects with a combined value of $500 billion. Also over half a trillion. Wow. Mining. Mining. Shall we? I'm a big into mining guy. And actually, you know, when we discuss- This isn't crypto Bitcoin mining, okay? No, damn. This is like pickaxe in the ground. Yeah, Minecraft. You know, all the kids these days are playing Minecraft. Yeah, you get it. You know what it is.

[00:06:47] It's interesting though because minerals were one of the things that were not super vulnerable on the tariff side. Canada holds vast mineral reserves and global and domestic demand continues to drive investments in areas such as electric vehicles, right? Critical minerals for electric vehicles, other green technologies, battery production, right? Lithium brine.

[00:07:09] The mining sector directly or indirectly provides about 711,000 jobs in Canada and about 5.9% of the Canadian economy in the 2024 inventory. There are about 138 mining projects with a combined value of $117 billion, so a tenth of a trillion. Thank you for the constant trillion references really helping me figure out how much money that really is. Forests are the next one that we're going to look at.

[00:07:39] 26 major projects in the forestry industry with a combined value of $5.5 billion. Look, the forest sector is a very important contributor to Canada's economy. I mean, just look at a map of Canada. You'll notice one color specifically, and that is green. There are a lot of forests here in Canada. The sector directly or indirectly supports almost 367,000 people in the accounts for 1.8% of the Canadian economy.

[00:08:08] Canada's forest sector traditionally produces things like lumber, which, you know, it's pretty relevant to housing. Panels, pretty relevant to housing. Wood pulp, still pretty relevant to housing. And, of course, paper products. The next one there would be clean technology. Clean tech market presents opportunities to assist with transition to lower carbon economies, both domestically and abroad. 205,000 jobs and about 1.4% of the Canadian economy.

[00:08:35] 215 projects classified using clean tech for about 194 in potential investment. Would this include things like nuclear? Because I feel like that's a big number. And nuclear, I think, is in there. And nuclear, like I'm of the opinion that nuclear is like the way of the future. Germany, I mean, if we're ever going to become like an advanced like space-faring species, if you and I ever want to be able to sell property on Mars, the, you know, I think we need nuclear power, right?

[00:09:06] And, you know, Ontario really seems to be leading the charge with that, to be honest with you. Yeah. Yeah, I believe you're right. I believe nuclear does fall under the clean tech space. And speaking of clean, let's not forget that Canada has some of the cleanest air in the world. Like, truly, to go in there and take a breath of fresh air, I believe the saying, take a breath of fresh air, was invented by a Canadian when they realized how amazing the fresh air is here.

[00:09:34] You know, thanks to our seemingly low population per size of country, the huge expanses of the forested land, the quality of air here in Canada is second to only Iceland. Okay. So next time you walk outside, no matter where you are in this beautiful country, if you're walking right now while listening to us, do me a favor and take a big deep of fresh Canadian air in and enjoy it.

[00:10:01] Don't we do like a big portion of like the carbon sequestration in the world because of our trees there? Massive. Yeah. We're going to talk about lakes? I'd love to. Love to. No, you're a lake guy. I'm the air guy. Okay. So Canada has more lakes than any other country in the world. According to recent measures, it holds more than 60% of the world's lakes. And I think almost a comparable percentage of the world's fresh water.

[00:10:31] But don't worry, we will get back to water later on. Let's start with something that does not mix well with water. Oh, okay. Oil. One of the most abundant natural resources found here in Canada with recoverable reserves estimated at more than 173 billion barrels. The country is home to the third largest proven oil reserve in the world.

[00:10:56] Now, while the oil industry is active across the country, almost all of the actual production comes from provinces like Alberta, Saskatchewan, and then on the East Coast, Newfoundland, and Labrador. And Alberta is where most of the oil is produced in Canada, about 80% because of the oil sands. Saskatchewan has billions more barrels of reserves in the ground and is responsible for about 13% of Canada's oil production.

[00:11:20] Meanwhile, millions and billions of more barrels discovered and undiscovered are found north and east off the coast of Newfoundland and Labrador, which I recently learned actually from Nick, my second favorite Nick, actually. One of our students in realist.ca who's a big investor in Newfoundland. East Coast Nick. Yeah, he just did a really wicked off-market deal out there. I'm going to invest in his next deal for sure, by the way.

[00:11:48] I'm like super, super bullish on Newfoundland. But he was saying like, I guess because it's sea level or something, I don't know, something that transcends my intelligence level, they can charge a different price for it. Plus, it's like already on the coast. So, you know, if we're trying to deal with these issues of whether or not the US is going to be a good trading partner for said oil in the future, you're easier to ship it to other places because it's already on the place where the ships are, the old ocean. The water. Yes.

[00:12:17] Not a lake, but a larger body of water. Okay. So, agreed, Dan. But let's go through a couple quick facts just to put the size of this industry into perspective here. Okay. Third largest in the world, 170 billion barrels of recoverable reserves. An additional 250 barrels could potentially be discovered with new technology. Canada produces over 4 million barrels a day. The fourth largest exporter.

[00:12:42] And almost all of that oil is sold to big bro down south. That is United States of America that buys more than 95% of our oil annually. And naturally, Dan, you're going to talk to me about another form of energy here. I'm setting you up here. Let's go. Oh, like you said, naturally, like that was your pun again? I mean, I'm trying. You should have made a gas pun. I was going to. I was going to. I didn't want everyone to know you're a gassy.

[00:13:12] Yeah, I'm a big gassy guy. People call me a gas man. Natural gas is something that I produce a lot of, but also something that Canada produces a lot of. Another natural resource found in abundance in Canada. The world's fifth largest producer and sixth largest exporter. It is estimated that there is 1,300 trillion. 1,300 trillion? Is that there's going to be a better number for that? Come on.

[00:13:42] That's how much there is, man. How much there is, man? I'm going to figure this out. 1,300 trillion cubic feet. Quadrillion. Wouldn't that be at 1.3 quadrillion? Yeah, it's like an unimaginable amount of football fields, right? Because that's when everyone likes the comparison. 1.3 quadrillion cubic feet of natural gas potential in the country. I think we kind of missed our shot on the LNG thing with Europe personally because of policy. Let's say policy.

[00:14:11] We won't blame any individuals. What do they say? We listen, but we don't judge. But there was some policy that prevented that from happening when Europe became a huge market of demand for LNG. Just saying. Natural gas is produced in almost all provinces and territories. Most natural gas consumption comes from the Western Canadian sedimentary basin spanning BC, Alberta, and Saskatchewan, which together account for over 99% of Canada's total output.

[00:14:38] Natural gas provides roughly one-third of Canada's energy and meets about one-tenth of US demand. Global LNG consumption is growing rapidly. BC's planned LNG export. LNG stands for, I think it's the liquid. Liquid natural gas. Liquefied natural gas. So that's gas that you can, it's been liquefied so you can ship it in like containers, right? So like kind of like a propane tank. Yeah. Those export projects could significantly boost Canadian prosperity if completed.

[00:15:06] Because there is big global demand for gas, for heating stuff. Yeah. People need heat in the winters. We know that better than most here in Canada. Okay. Again, a couple quick facts to put the size of that industry into perspective. Fifth largest natural gas producer in the world. Sixth largest natural gas exporter in the world. And at current consumption levels, Canada could provide natural gas to consumers for the next 300 years. To our own consumers.

[00:15:36] To our own consumers. Yeah. So if you're not getting the point of this episode so far, and we are just going to hit you with another 10 amazing things. Canada has just a few things going for it. Dan, what is the next thing Canada is extraordinarily good at producing? Potash. Canada is the number one potash producer in the world. I think by like a huge margin too, by the way. So what is potash used for? Fertilizer, animal feed, detergent, soaps, batteries, prescriptions. We are the largest producer of it.

[00:16:06] It also has the world's largest potash reserves and is about a third of the total reserves in the world at 1.1 billion tons. Canada, Russia and Belarus accounted for approximately 70% of the world potash production in 2021. Almost all potash mines are found in Saskatchewan. The majority of potash production is used to make fertilizer. In Saskatchewan, they talk about food, fuel and fertilizer a lot. That's like their thing, right?

[00:16:35] And they sell it. I think they sell it. I think their biggest trading partner is actually India. I think India buys a lot of fertilizer. Yeah, I think you're right. Yeah. Okay. Yeah. So tons of potash, number one. Number two producer of uranium in the world. Okay. So number one producer of potash, number two producer of uranium. Well, what is uranium used for? I don't know. I'm not familiar with it.

[00:16:57] That's okay because it's used for things like nuclear power, radiology, medicine, radiometric, dating, industrial x-rays and food processing. Is that a new tech thing? Like Tinder? I think it's dating for scientists maybe. I'm not exactly sure. But it's used for very important, very highbrow things. Okay. If you don't understand radiotherapy and nuclear power, don't worry. Neither do I. I just know that they are important and I know that we create a lot of what is important for those things. You mortgage brokers will do anything.

[00:17:27] Maybe come up with a bull case. Oh, come on. Well, yeah. House price is going to go up because of radiometric dating. You know? Yeah. It's like Tinder, but it's like four syllables. You got to know. It's got to be. If the scientists are happy, that's good for the economy. Okay. So home- Literally rocket science. Okay. Home to the fourth largest uranium reserves in the world. Canada is the second largest producer of uranium, responsible for 15% of world production in 2022.

[00:17:54] Now, Saskatchewan in particular, home to vast majority of the uranium mines in Canada. The MacArthur River and Cigar Lake mines in the northern part of the province are two of the world's largest uranium mines relative to production. These mines have some of the highest quality uranium in the world. And that's the good thing about a lot of the stuff we produce, Dan. Outside of the oil sands, which is harder to get that crude oil out, we produce a lot of high quality natural resources here as well.

[00:18:21] So, you know, another piece of the bull case there for Canada. Nearly 85% of Canada's uranium production is exported around the globe. So, again, lots more going for Canada. But this third one here, the third producer that we are, the third thing that we're really producing, give you a hint.

[00:18:45] Most people buy one, hopefully just one in their life and usually put it on someone's finger. However, they are used for many more. What am I talking about here, Dan? What am I alluding to? I'm having a hard time getting past this place called Cigar Lake. It sounds like a place that would be a good time. Sounds like a good place to enjoy a cigar. Cottage country. I know a couple of guys I play hockey with would definitely like that place for sure.

[00:19:16] The next one is diamonds. As they say, diamonds are forever, right? Canada is the number three producer of diamonds in the world. And those are real diamonds, I think, right? We're not talking about fake diamonds? Nope. These are real diamonds, like engagement ring diamonds, jewelry diamonds, cutting blade diamonds. I heard that the majority of engagement ring diamonds were fake now. Or not fake, but like the manufactured ones. Let's not call a bunch of people out on the show here.

[00:19:45] Get your diamonds wherever you see fit. Anyway. Well, yeah. I don't know. I was reading a Twitter thread about it, so it could have been wrong. Misinformation, whatever. I think there's no way to tell anyway. Not for me. Diamonds. Diamonds, regardless of whether they're fake or they're blood diamonds like that movie back in the day, they are used for a lot of stuff. Jewelry is an obvious one. Drill bits, which you need one of these if you want to do drills through hard stuff like metal, masonry, etc.

[00:20:14] Electronic heat sinks. Cutting blades. Same thing. You want to cut things that are hard? Harder than what typical saw blades are made out of? You need a diamond-tipped blade, saw blade. High-tech membranes. That's bull case for Canada right there. Realtor stuff. Grinding stones. Very similar to cutting blades. You want to grind something stronger than what the blade is made out of? Got to have diamonds all over it. They just coat that stuff in diamonds.

[00:20:43] Canada's total primary diamond exports were $2.2 billion. We produced 18.6 million carats of rough diamonds in 2019 valued at $2.25 billion. So 12.5% of global production. The third largest producer by volume. No blood diamond stuff like that movie going on? I feel like that was maybe done by Big Diamond in Canada to get the – maybe. Who knows, right?

[00:21:10] Well, if that's the case, then I want to talk to Big Gold as well, which is next. So, you know, so far Canada's doing pretty well. Number three, produced in the world of diamonds. Number two, produced in the world of uranium. Number one, producer in the world of potash. And number five, producer in the world of gold. Okay? Now, again, gold, you're thinking jewelry. You're probably thinking of all the gold chains that you probably wear because you're really cool. But gold goes into a lot of other stuff, all right?

[00:21:40] Cell phones, computers, medical equipment and diagnosing equipment and aerospace technology. And then, of course, you got your gold bricks and your gold bars for our finance bros out there. But gold is Canada's most valuable mined commodity with a production value of $13.7 billion a couple of years ago. That's back in 2021. I'd assume it's probably either grown slightly or maybe stayed the same to that figure. It's mined in 10 different provinces and territories across the country.

[00:22:09] 70% coming from Ontario and Quebec. Globally, Canada was the fourth largest gold producer for quite a few years in 2021. That's the last time we have data for it. Accounting for almost 10%, 7.2% of the world's production. And the country has also a home to the seventh largest gold reserves. So we got gold. We got diamonds. What else do we need?

[00:22:33] The hunt camp that I go to, well, my dad owns it actually, but it has an old gold mine on it. Oh, okay. Yeah, that's crazy, man. There's like an old railway system in there. Have you found anything? Don't make me ask. Please tell me guys who've gone down there. Well, there's core samples up there. You can't go in the mine. It's collapsed, right? But there's like oil tanks. There's like old mining carts and stuff. It's really crazy history back there. Yeah. There's old soda cans from the 20s.

[00:23:02] I think it was like in the 20s. Back when they were soda pops. Yeah, something like that. That was like when they still had the cocaine in the Coca-Cola, I think. You know, crazy. Let's move on to number eight, iron ore. The eighth, number eighth producer, eighth ranked producer. How do you say that? The number eight producer of iron ore in the world. There you go. Canada. We use that for steel. It's a base of steel. Medicine. Paints. Auto parts. Catalysts, which is rocket science stuff. Magnets.

[00:23:32] Iron ore is, you know, I think we have the six largest crude iron ore reserves in the world. And as of 2021, about 3.3% of known global reserves. And in 2021, Canada imported more semi-finished steel than, I don't know, anywhere else in the world. The iron ore is an essential material in the steel production. About 98% of iron ore is used in steel production. The remaining 2% is paints, plastics, et cetera. I don't know.

[00:24:01] It's kind of weird that they have iron and paints, eh? But I didn't know that. Fertilizer? Is that the same iron that you can take into your supplements? I think it's different. It's got to be different. You know, just eating metal, are you? Yeah. Let's not embarrass ourselves here with that. I have no clue. But I do know that, again, you know, you think, when I think iron, I think industry. I think production. I think, you know, I think construction. Again, which are all, you know, a lot of this stuff. I think of Arnold Schwarzenegger. Okay. I set you up for that one, I guess.

[00:24:32] But, you know, when we think of this stuff, a lot of this stuff relates back to solving a lot of the issues we have right now, right? Housing being one of them, jobs and income being another. So on that note, let's keep moving down here, okay? I mean, you know, when I think of production and iron ore, I think of smokestacks and black billowing smoke. Kind of the same thing when I think of coal. But that's not the way that it happens these days. Now, Canada may not be the best or have the largest coal reserves,

[00:25:02] but it happens to be the fourth largest global exporter of metallurgical coal that is used for steelmaking and the 16th largest producer. That was back in 2021. With the world's 16th largest reserves, Canada produced 48 million tons of coal. Now, most coal reserves in Canada are found in BC and Alberta. And in BC, the coal industry generates billions of dollars in economic activity for the province annually

[00:25:29] and is an essential part of the largely natural resource-based economy that we see in some western provinces and, quite frankly, across the country. The Port of Vancouver on Canada's west coast happens to be North America's single largest coal exporting location. Now, Dan, another thing that we think of when we think of industry and housing, wood. So this list for wood alone here is ridiculous.

[00:25:56] Walk me through this list here. Isn't it crazy that, like, we just landed on, like, we're just on this planet. We didn't land here. We're not aliens. So you just, it's like, you know, when people talk about the simulation and stuff, we, like, we're playing this video game, right? And you just, like, arrive on this planet. You just show up there. And then all of the stuff you need is there, you know? Like, all of those reasons, it's just there in the ground. Just got to figure out how to get it out and turn us into stuff. Oh, pretty convenient. Anyway, sorry.

[00:26:25] You asked me a very pointed question and I didn't answer it. I'm distracted thinking about the simulation. Softwood lumber in Canada. Canada is a top 10 global exporter of a handful of forest products. Number one in softwood lumber. Number one in newsprint. Number one in oriented strand board. Do you know what that is? We talked about it on the show for OSP. It's the flaky plywood. Yeah. Plywood is plywood. Number one in NBSK, which I have no idea what that is.

[00:26:53] And I'm embarrassed that I don't. Yeah. It's like the pulp stuff. It's like the really finely cut up paper used in, like, packing. There you go. Perfect. Done. Thanks, Nick. Hey. Number two in logs, which goes along with the natural gas I was talking about earlier. Just kidding. Bad joke. Number two in wood pellets, which I'm a wood pellet guy. I use a pellet stove to heat my garage, which I'm actually sitting in right now to record this very episode and the pellet stove is running. Number four in hardwood lumber. Number four in dissolving pump.

[00:27:22] Number six in household and sanitary paper, also known as toilet paper. You might have remembered that from 2020, the toilet paper apocalypse, COVID, nostalgia right there. Seventh in plywood. That's plywood. Seventh in packaging. Eighth in printing and writing paper. So a couple wins on the board there. Just a couple. A couple medals. They need like an Olympics, but for stuff that we're good at.

[00:27:50] I guess we have because we have 30% of the world's forest area, we're able to do this, right? 34.8 billion contribution by the forest sector to the national economy in 2021. 206,000 jobs. Top 10 exporter of all of those products and employs people in rural communities, including about 11,000 First Nations.

[00:28:16] The majority of forestry sector is in BC, Ontario and Quebec, which there's lots of trees there. So it makes sense. Now, outside of the lots of trees that we have across the country, we mentioned it already very briefly. We also have a lot of water. I am looking at a map right now that just basically shows water streams, lakes, rivers here in Canada. And not only is it mesmerizing, but it is also fascinating. Water might just be the most important natural resource that there is.

[00:28:46] It is literally essential to your life, my life, life on our planet. And fortunately, it is yet another natural resources that Canada has in abundance. Canada is home about 20% of the 1,386 billion square kilometers of freshwater in the world. And while only 7% of Canada's freshwater supply is deemed renewable,

[00:29:10] it's still a massive number for the country with around half of the percent of the world's population. Approximately 9% of Canada's land is covered by freshwater. So, you know, here's a funny stat, Dan. Rivers in Canada discharge freshwater at 105,000 cubic meters per second, equivalent to roughly 42 Olympic-sized swimming pools per second. All right?

[00:29:37] I know you're a big, I don't understand things unless they're compared to football fields or Olympic-sized swimming pools. So, that one's for you. How many of Drake's pools is that? I only do Olympic-sized. Sorry, that's the only metric I know. Speaking of water resources, this is a, I was excited to, I was going to, I almost, what do they call it, jumped the gun. Is that when you shoot early on this earlier in the episode? But have you heard of this like thing about the water wars?

[00:30:06] I have. Yeah. I have, yes. A lot of experts and political scientists have theorized that the next major global conflict would revolve around water resources because they're putting more and more pressure on freshwater resources. There's like 2 billion people already with water uncertainty or like water stress. More and more river basins drying up.

[00:30:31] And all of this leads me to this, you know, Michael Burry, right? Of course. Yeah. So, for those who don't yet. So, Michael Burry was known for- Played by Christian Bale. Yeah. The like, the kind of off guy with the, he has a glass eye, right? Yeah. And walking around with the drumsticks, just doing casual things like predicting, you know, housing crises and things. Yeah. So, he's known for predicting the 2008 housing crisis.

[00:30:59] There's been a vocal advocate for water investment since the late 2000s. After successfully betting against the housing market, he turned his attention to water, stating that fresh, clean water cannot be taken for granted. And it is not. Water is political and litigious. And he focused in his investments on water-rich farmland and companies involved in infrastructure and treatment. I think like he's like pretty much all in on that. And his thesis is simple. As water becomes scarcer globally, regions with abundant freshwater resources like Canada will become increasingly valuable.

[00:31:27] This aligns perfectly with our position as holder of 20% of the world's freshwater supply. So, it is very apparent that Canada has almost an unprecedented level of natural resources. And they present a huge opportunity for Canadians and the overall prosperity of the Canadian economy. Now, just to be crystal, like crystal blue water, like Banff National Park, Lake Louise, crystal blue water, clear with all this stuff. I don't want anyone out there to get it twisted.

[00:31:57] We aren't saying let's just go and extract all these, you know, valuable natural resources in an irresponsible manner and destroy our beautiful country here. Quite the contrary, actually. The resources that we have present us with an amazing opportunity to build out specialized jobs and full new technological advancements within these sectors in order to maximize our returns and do these things responsible.

[00:32:27] Exactly. So, let's go over what that might look like and some of what we just spoke about and how that could impact the economy. And, of course, real estate, housing. Let's start with the economic benefits. The resource extraction industries can create high paying jobs and economic stability, which increases housing demand, resource rich regions, demand for people to continue to move to Canada.

[00:32:49] If our economy is growing, if our GDP is growing, if we're providing good jobs for people, the $34.8 billion contribution from the forestry sector to Canada's economy is 206,000 jobs as an example. You know, we have hundreds of other examples of that across all of the other resources that we just mentioned on this episode. So, you can imagine kind of scaling that across the country.

[00:33:13] And these are like localized small communities, a couple of affordable cities that we mentioned in our last episode. You know, these aren't places where it's like impossible for people to live. You know, like some of the urban centers, like Canada has been super focused on knowledge work, right? You try and live in like the city of Toronto, work for, you know, some white collar job. It's like, well, I can't afford it, right? Vancouver, same thing. Resource is a little different, right? You go buy a house in Kirkland Lake, go work in a mine. You're making like, you know, six figures and paying, you know, whatever thousand bucks in rent or like, you know, 150 grand for your house. Yeah.

[00:33:43] Yeah, it's exactly right. I mean, the cardinal rule of real estate, right? Location, location, location. How do these potential opportunities to create more jobs affect that? Well, you know, resource extraction, as you said, then often happens in those rural areas. And if those rural areas aren't focused on, you know, we might just see them die out. But really, we can create economic development and housing demand and full infrastructure around certain new places.

[00:34:11] And Canada also goes back to when we talked about that CD Howe report recently about can we just build new cities? Well, yeah, we can. We just need to build them around things like mining operations or potash operations or gold mines or diamond mines or iron ore factories, refining plants, you know. So I think it really lends itself to a huge opportunity. Yeah. We also are positioned well, you know, I mean, we're hearing a lot about housing crises in the Western world, U.S. as well, right?

[00:34:41] Canada. And we even saw and we mentioned it on the show, like, you know, with some of this tariff stuff, U.S. home builders were pushing back in a big way against Trump's tariffs. Canada's positioned as a major softwood lumber producer to ensure reliable access to renewable building materials, right? Yeah. For the housing industry.

[00:34:59] Mineral sector provides essential minerals for home construction, you know, insulation, et cetera, as well as many other sectors, potentially reducing costs compared to imported materials, but also, you know, playing a huge role in like EVs and microchips and all that stuff, right? For sure. For sure. Now, you know, going through that list, the first time I did it, I was fascinated.

[00:35:22] And now when we've done it together and it puts a smile on my face, it makes me think of long-term stability here within Canada and our economy, right? The diversity in Canada's resources is unparalleled oil, minerals, lumber, water. It creates multiple different economic pillars that could have massive, not only stabilization factors, but huge growth factors within the economy.

[00:35:48] You know, there's each one of those sectors, we have such an opportunity to refine and become a leader in emerging technology applied to national resource expansion. So it really gets me excited to see all the different opportunities within those different sectors. Now, you all know we like data on this show. In fact, it was my son's first word, data.

[00:36:19] It's kind of our thing. It really is. But we aren't talking numbers and charts here, are we, Dan? No, we are talking data centers, which both PwC and ULI in a recent report put as a major emerging trend for investors in Canadian real estate. Now, a data or daddy or data center, Dan, I'm not sure which one you're leading with there. A data center.

[00:36:44] It's physically a facility that houses computer computing and network equipment like servers and storage devices that's used to collect, process, and store. And then distribute that data for businesses and organizations, essentially acting as a centralized location for managing critical applications and information access. Wow. I could barely even say that. So basically what it is, it is a, where, you know, the cloud, where all that information goes?

[00:37:12] Well, it goes to a physical location. Crazy enough. So the cloud actually lives in a data center. Ah. So this is like literally the physical location of said cloud. It is the cloud. Yes. The cloud does not look like the cloud. It looks like a big industrial warehouse with heavy security. Got it. So this is a quote from the report that you referenced. The emergence of niche property types, such as data centers and cold storage facilities, is a notable trend.

[00:37:40] According to Fred Cassano, partner, national real estate leader for PWC Canada PricewaterhouseCoopers. Might have heard of them. Pretty big deal. These properties are becoming prime investment opportunities in 2025. Data centers are in high demand due to increasing need for a computing power driven by technologies like Gen.AI, cloud computing, and the Internet of Things. Like this demand is so big that they're literally buying like old nuclear power plants and stuff like that to run it, by the way.

[00:38:09] So this is also the Internet of Things, IoT, you might have heard. There was a cryptocurrency built around that for a while, right? IOTA seems to have disappeared, though, as cryptocurrencies tend to do. Similarly, the demand for cold storage facilities is rising, fueled by the need for fresh and frozen food, online grocery shopping, and meal kit delivery services.

[00:38:34] These shifts towards specialized investments highlight a broader transformation in the real estate market where traditional asset classes like office and retail are being supplemented with more specialized and kind of like new properties or asset classes. Yeah, and it's kind of cool because those new specialized asset classes seem to be more at home in Canada. Dan, you mentioned Gen.AI, which is generative AI. Sorry for not everyone's AI up to date as you are, but generative AI.

[00:39:03] Now, I want you to think about like large language models such as well-known ChatGPT, ChatGPT3 or 4, whatever model you're using. Well, these things have massive, massive energy requirements. Training ChatGPT consumes 1300 megawatt hours of electricity. That's equivalent to 130 American United States homes. Annual usage, absolutely crazy.

[00:39:32] Well, a simple Google search, remember those back in the day, only uses 0.3 watt hours. So an absolute massive, massive difference now if ChatGPT were used for all daily searches, about 9 billion of them. Yearly electrical demand would rise by 10 terawatt hours, matching the consumption of about 1.5 million EU, European Union residents. AI models, particularly as Dan would say, Gen.AI.

[00:39:59] Why models like ChatGPT4 are becoming exponentially larger, meaning they're becoming smarter, which means more training, means more searches, which means more data center storage is required because more energy is being used. So we need a place to put all of that energy. So we need a lot of data storage, which means we need a lot of data centers. You are correct, sir.

[00:40:24] So already data centers account for 1% to 2% of global energy demand, similar to what experts estimate for the airline industry as a decent comparable, right? So think about planes flying everywhere and airports being on, a couple lights and stuff like that there. This figure is poised to skyrocket given rising AI demands potentially hitting 21% by 2030.

[00:40:50] I mean, you and I have even been talking to quite a few people in our spheres. Like I have a couple of groups that are investing in this type of stuff in Canada and the US doing data center projects in Canada and then also on indigenous lands in the US. You know, we've got a friend who does some brokerage. Like he's one of the biggest brokers for these types of properties in the US.

[00:41:18] And one of my biggest like real estate developer clients is, well, actually two of them are kind of going to go all in on this strategy. So it seems to be like there's a lot of heavy hitters with experience and capital chasing this asset class. And speaking of heavy hitters with capital, you might have heard of these guys, Golden Sachs research forecasts global power demand from data centers will increase 50% by 2027.

[00:41:48] And by as much as 165% by the end of the decade. And guess what? Canada is the perfect place given our power and cold climate to house these data centers. Exactly. Now, listen, a lot of Canadians like to complain about the cold winter months we have in this country. Present company not excluded. Let's be clear. You know, after the 10th snowstorm, I miss the sunshine and the warmth.

[00:42:17] Now, in many cases, the winter months for a while have almost seemed like a bear case for Canada, right? Hence the snowboard phenomenon people want to get out of here. But the natural cold weather is actually a huge bull case for Canada and the massive emerging data center sector. Yeah.

[00:42:34] Canada is considered a pretty solid location for data centers due to its cool climate, which allows for natural cooling, stable political and economic environment, access to renewable energy sources, robust infrastructure, proximity to major markets like the U.S. All of these things combined makes it attractive for companies looking to store and manage data efficiently. Now, let's maybe finish off with some housing, specifically what the future holds for this very important part of our economy.

[00:43:02] Yeah, I guess we have to do some housing specific stuff, you know, being the Canadian real estate investor podcast and all that. Yeah, it would be a shame if we didn't because that's kind of how most people are able to invest. I would say that's your kind of your entry level investment, right? Either that or like REITs, which you could invest in any of the things that we just mentioned, probably through REITs or stocks. We won't go into great detail here as we have done full episodes on most of these.

[00:43:26] But, you know, again, back to the bull case development charges, we are finally seeing the craziness that was DCs move in the right direction and allow for developers to take on projects that make a little more sense. We are still very early here, but things seem to be moving in the right direction, even if it's still slow and frustrating. We are seeing progress. Exactly. And it's not just on the development side of things that we're seeing progress, Dan.

[00:43:52] And new financial products, which have always been wanted by investors and developers and citizen developers alike here in Canada are making an emergence here in the last couple of years with stuff like CMHC's MLS Select, right? That's supposed to make homes more accessible to both builders as well as end users. We got the secondary suite loan program, which allows low interest loans up to 80,000 to go in and add a suite.

[00:44:21] You know, there's numerous of these new financial products that are being released or at the very least proposed here in Canada that are going to have an effect on and hopefully a positive impact on housing overall. And I'm looking forward to seeing how a lot of these things play out.

[00:44:40] One of the main issues for development, whether it was adding a basement apartment or, you know, whatever you want to, to a home or building a, you know, 30 story apartment was the approval process in Canada. It had been pretty dismal over the last several years, but we have seen progress here as well with faster approvals starting to emerge from governments, streamlining a process. You know, governments of all levels seem to be trying better and cultivating more skill at dealing with some of these requests.

[00:45:07] Exactly. Not just that, right? It all, we can't have one thing and it all has to be happening at the same time for things to work. And they seemingly like we're getting close, I think, because even new housing typologies, right? We've seen a big push for things like missing middle, which had an amazing event on it. We'll have several more and new emerging products like that need to be accepted by the masses like ADUs and laneway homes.

[00:45:32] And a lot of these new typologies, all the stuff that CMHC just released in their housing catalog, right? There's now a push for this type of new housing typologies. Yeah. Better landlord and tenant resolutions from governing bodies like the LTB here in Ontario, which was once infamous for having some absolutely ridiculous wait times. And I mean ridiculous, like over a year in some cases.

[00:45:55] Now we aren't out of the woods on this one yet, but we have seen some positive improvements with timelines and resolutions here as well. Okay. And finally, we went this whole time without saying it, but of course, a growing population. This has been touted for a long time as the main bull case for Canada. And although it can be a bit of a contentious topic, I think after we've spoken about all of the other things that Canada has going down, we got to talk about this one too.

[00:46:19] More people lead to higher demand for goods and services and more people overall boost economic growth and opportunities, especially if we start to uncover some of the numerous opportunities we just spoke about, right? Larger population enhancers enhances the labor market and which can attract more and new businesses because population drives infrastructure and real estate development and creates new investment opportunities.

[00:46:43] And with Canada's welcoming immigration policy, we have the opportunity to bring in a diverse set of skills that can contribute to our entrepreneurship and enhance our economy by, you know, specializing in some of these emerging sectors that we just spoke about. And then of course, you know, we need more young people to deal with our aging population that we have here in Canada.

[00:47:04] I think another one is actually, you know, if you're going to talk about climate change also, or sorry, if you're going to talk about demographics, I'm going to talk about climate change. There's this theory, have you ever heard of this? The Lifeboat Britain theory? Just the other day. Literally just the other day was speaking to this about someone. Yeah, with someone. Yeah. Yeah.

[00:47:23] So as global temperatures rise, basically the idea is that as climate change makes parts of the world increasingly uninhabitable, so talking about like climate migration due to rising temperatures and desertification, countries in more temperate zones, particularly those further north, Britain being like the lifeboat, right? The idea of where this principle came from will become climate refuges or lifeboats for humanity, right? And actually when we did our interview with Chip Wilson, he talked about this, right?

[00:47:52] He talked about how like, you know, a lot of the energy will be produced from solar and like in the deserts, right? And then people will live kind of like further away, but all of like the industry will be in those hotter climates close to the easier places to get energy. He had a very interesting perspective on it, but as global temperatures rise, Canada could benefit from it. I mean, this is a bit of a Hail Mary, right? But, you know, it's a theory nonetheless. So let's also not forget, again, kind of circling back to your demographics.

[00:48:20] We're a young country with lots of growth to come and maybe we will experience some growing pains. And we definitely have over the last few years. According to statistics, Canada, our population could grow to between 45.2 and 80 million by 2074. It's a pretty big range to be honest with you. But Canada's population goal is to grow to 100 million people by the year 2100 as set by the Century Initiative.

[00:48:46] Look, and at the end of the day, Canada's exceptional natural resource wealth provides a strong foundation for economic resilience and growth with the world's third largest oil reserves, largest part of potash reserves, second largest uranium production and 20% of the world's fresh water. We've got gold. We've got diamonds. What more do you want?

[00:49:07] These resources support hundreds of thousands, millions of jobs and put billions of dollars back into the economy. Combined with Canada's ambitious population growth goals, that 100 million by 2100, the Century Initiative, which it seems like all of our politicians agree upon. And all of our politicians actually even, you know, it seems to be something agreed upon on both sides of the aisle.

[00:49:31] If it's probably one thing that's happened, the one silver lining in this whole tariff trade war roller coaster is that they're all politicians seem to be realizing that our natural resource base and exporting some of that like oil and all of the other things to other markets, maybe not just the US is then diversifying our economy and diversifying our trading partners are going to be probably pretty necessary to insulate us from that from that roller coaster.

[00:49:57] These factors all kind of combine to create a compelling long-term investment case for Canada, despite current challenges. As history often shows, the darkest moments often come just before positive change. So on that note. Is it like the dark ages right before the bronze age? Was that what it was? It was right before the enlightenment. Oh, there you go. So stay positive. Better history, yeah, than me. Be optimistic and let's rise to the challenge. Let's not forget that, yes, it's very easy to be negative. It is harder to be positive and we like to do the hard thing.

[00:50:27] Nick is back. He's back. I love it. Back with a vengeance. Did you do this whole episode for that one guy who wrote us a review saying that I'm too, yeah. That was nice of you. Yeah, I was like- Trying to get a five-star review. Try to use like every one star, two star review. Just lights a fire and I'm like, you know what? You didn't think we were positive enough? Well, here is an entire hour on how good Canada is. So Nick listens to your feedback, positive or negative, but he's going to ask you for, he's going to ask you if you're listening to this show to leave us some five-star reviews to balance that.

[00:50:56] I am. I am. So again, let's not forget that, again, things might seem bad or hard right now and they have seemed like this before. Talk to someone older than you and they will tell you that this has happened before. And look, things will seem bad again in the future. Focus on what you can control and focus on delivering value. The content of this podcast is for educational and informational purposes only. It is not intended as financial, legal or investment advice.

[00:51:23] Always consult a qualified professional for advice tailored to your unique circumstances. The views expressed are those of the hosts and guests and do not necessarily reflect the opinions of affiliated organizations. Daniel Foch is a real estate broker licensed with Valerie Real Estate Inc. Website is Valerie.ca, V-A-L-E-R-Y.ca. And a member of the Canadian Real Estate Association, the Ontario Real Estate Association, and the Toronto Real Estate Board.

[00:51:52] Nick Hill is a mortgage agent and partner at OWL Mortgage. License number 10317. Agent license M21004037.