Affordable housing and tourism growth seen as an important economic legacies from the Games
TORONTO, Sept. 11, 2013 /CNW/ - Toronto’s economy, already the strongest among Canada’s major cities, is likely to get a significant boost from the 2015 Pan Am/Parapan Am Games both from increased tourism and capital spending on sports venues and infrastructure projects, finds a new report from CIBC World Markets.
“The combination of the scale and brief duration of the Games suggests that the economic benefits to the city of Toronto will be significant,” says CIBC Deputy Chief Economist Benjamin Tal, who co-authored the report with CIBC economist, Andrew Grantham. “Those will be enhanced by the city’s already strong economic momentum.”
The Toronto Pan Am Games will be Canada’s largest multi-sports Games ever hosted in terms of the number of athletes participating. An estimated 7,500 athletes are expected to take part in the Toronto Pan Am Games, three times more than the number of competitors in the Vancouver 2010 Winter Olympic Games.
While a big sporting event can lift a city that’s in decline, that stimulus tends to be limited and temporary in the absence of strong organic economic fundamentals. “Fortunately, that’s not the case for Toronto,” says Mr. Tal.
“In fact, the GTA’s economy has been on a prolonged upswing. During the year ending June 2013, population growth in the GTA was twice as fast as in the rest of the country, while employment advanced even faster.”
As a result of these strong fundamentals, Toronto’s economy once again takes the top spot among the country’s major urban centres in the CIBC World Markets’ latest Canadian Metropolitan Economic Activity Index rankings. The city has ranked number one since the summer of 2011.
The Pan Am/Parapan Am Games’ has given Ontario’s economy an added boost from capital spending that primarily involves the building or upgrading of more than twenty venues for the Games, and the redevelopment of the West Don Lands, a 32-hectare former industrial site, the report says. Overall, the Games are expected to generate about 26,000 new jobs.
Mr. Tal notes that the construction of the athletes’ village, which will be converted to affordable housing after the games, is an important part of the game’s potential legacy. But like any other infrastructure project, he says there are no shortage of risks, including unsuccessful integration with the rest of the city and unforeseen financial and environmental issues.
However, he believes the organizers learned from the experience of Vancouver by requiring the selected development teams to bring in a higher amount of equity as well as other contractual details aimed at limiting the amount of risk the government faces. However, he notes that any real estate deal is not immune to the risk of a cooling housing market in general, and the condominium market in particular.
The report states that the Games will also give a boost to tourism in the province. It estimates that if Ontario sees the same percentage jump in tourism that Vancouver did during the 2010 Winter Olympics, Ontario could have as many as 350,000 visitors, well above the official estimate of 250,000.
Assuming that 75 per cent of those tourists were Americans, who are far bigger spenders than overseas or domestic visitors, Mr. Tal says the increase in tourist spending during the Pan Am Games alone should generate an additional $260 million in gross domestic product and add more than 3,500 jobs in the sector.
“Hosting global events such as the Pan Am/Parapan Am Games and having facilities to attract additional events down the road, should help that trend continue. Add on the boost to construction before the Games and the hoped-for legacy impact afterwards, and you get a significant boost to Ontario’s GDP,” he adds.