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While much of the rental housing conversation remains focused on condominiums, Canada’s purpose-built rental stock is arguably the country’s most stable commercial property type. Thankfully for multifamily property owners, stability is a desirable quality these days.
Backed by solid fundamentals and record low mortgage rates, multifamily properties will continue to attract strong pricing and record low cap rates in many parts of the country. Rapid urban population growth has left many multifamily properties in desirable locations close to Central Business Districts and amenity filled neighbourhoods. In 2015, these properties will be given a second look to ensure that they represent the highest and best use. For select properties, there may be opportunities to increase density and grow revenue.
Private investor affinity for multi-unit residential real estate is unlikely to change. One shift on the investment front is the expectation that Canada’s REIT’s will increase their presence in this sector. REITs, along with a small group of pension funds, could play a large role on both the acquisition and development front. As a result, new, large scale multifamily developments could start to take shape in Canada.
With housing prices showing no signs of abating and interest rates expected to remain low, the multifamily sector is poised for another year in which renter and investor demand grossly outweighs supply.
Source: CBRE
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