A report by the Chartered Professional Accountants of British Columbia (CPABC) shows despite the COVID-19 pandemic, major capital projects continued to rise in 2020.
B.C.’s inventory of major capital projects, those valued over $15,000,000, increased to $369.8 billion in Q3 2020, up 4.8 per cent compared to the same period last year. As of Q3 2020, nearly a third of the major projects were under construction, including the LNG Canada Facility ($36 billion) and the Coastal GasLink Pipeline Project ($6.2 billion).
“B.C.’s major projects, driven by natural resource and infrastructure projects, provide thousands of both direct and indirect jobs and are spread across every region in the province. With employment and GDP expected to remain below pre-crisis levels in 2021, these projects will meaningfully increase economic growth and help pay down the large provincial debt incurred to support businesses and citizens through the pandemic,” said Lori Mathison, CPABC president and CEO.
CPABC’s BC: Check-Up INVEST report focuses on investment and business activity across the province and in each of the province’s seven regional developments. The report highlights major capital project activity, the decline in private non-residential investment, housing starts and business activity resulting from the COVID-19 pandemic.
The report notes investment into both residential and private non-residential projects cooled in 2020, and despite recent price gains, housing starts steeply declined. The overall number of units started was down by nearly a fifth (-18.3 per cent) through 2020 compared to the number started in 2019. Attached units, such as condos and townhomes, accounted for the majority of the decline, according to CPABC.
The economic climate also pushed private non-residential investment down to $5.0 billion in 2020, representing a 7.9 per cent decline compared to the level of investment in 2019.
“Economic uncertainty saw investors delay or cancel both residential and non-residential investment projects in 2020,” said Mathison. “Over 7,800 fewer residential housing units were started compared to 2019, and over $430 million less was invested in private non-residential developments. This is worrying as construction has been a large factor in the province’s robust economic growth. However, both attached and detached starts have rebounded from earlier in the year and major projects were up in 2020.”
Prior to the COVID-19 pandemic, British Columbia experienced record levels of investment activity. In fact, by 2019 the number of active businesses, housing starts, and private non-residential investment each reached record highs, and the province was forecast to continue leading the country in economic growth. Unfortunately, due to the economic uncertainty arising from the COVID-19 pandemic, investment and business activity took a significant hit in 2020.
