Report finds multi-family sector continues to be highly desirable for investors
International investors are finding opportunity in Canada’s housing shortage with those buyers increasingly eyeing Canadian multifamily properties in 2024, according to a new Colliers report.
The real estate investment management firm released its Global Investment Outlook Report for 2024, predicting that global investors will see an opportunity as inward migration in Canada increases the demand for residential real estate, further worsening the disparity between housing supply and the needs of the growing population.
Adam Jacobs, Colliers’ senior national director of research, explained that investors were beginning to stray from traditional assets such as office space.
“If you’re an investor, you’re looking and saying, ‘So even a fairly well-off person maybe can’t afford a house. Apartments are looking like a pretty attractive investment here just in terms of supply and demand. There’s been so much up-and-down for office, which is maybe the more traditional institutional asset to own but people are showing a lot more interest in apartments,” he said
Real estate demand and a growing population
From 2016 to 2021, the growth of Canada’s population has almost doubled the increases recorded in the United Kingdom and the United States. It was also nearly five times higher than the population growth of France and Germany, according to Statistics Canada.
The federal government stated earlier this month that it would continue its goal of bringing in 485,000 permanent residents in 2024, rising to a target of 500,000 by 2025.
Jacobs said population growth and high immigration levels mean that the next few years are likely to make the Canadian housing market a safe bet for investors. He added that while there is growing interest in the multifamily market, there remain many established entities on the sidelines.
“There’s research that says there’s actually a lot of money on the sidelines ready to be invested in real estate. It’s just that the problem is the inability to agree on the price and the stalemate around that,” he added.
With little indication from either the US Federal Reserve or the Bank of Canada that high interest rates will drop anytime in the near future, Canadian investors may be urged to move off the sidelines sooner rather than later.
“If that’s the case, we need to make some adjustments and start doing some deals again, instead of just waiting and waiting for the rate cut,” said Jacobs.
