Is this the next big investment?
Amid tight rental markets and economic uncertainties, purpose-built rental housing investments are gaining momentum as investors seek stability and diversification in 2025. Optimism in both private and public markets has been buoyed by falling interest rates and growing investor confidence, according to a recent report by Wealth Professional in collaboration with Equiton.
While equity markets in 2024 were dominated by the surge in tech and artificial intelligence stocks, concerns over their sustainability persist. In contrast, private real estate, particularly multifamily housing, has emerged as a resilient sector offering consistent income and long-term stability.
“With rising demand and carefully managed investments, private real estate offers a stable and strategic way to diversify in 2025,” said Geoff Lang, senior vice president of business development at Equiton.
Purpose-built rentals
Canada Mortgage and Housing Corporation (CMHC) has forecast ongoing tightness in rental markets, exacerbated by reduced condo developments. Purpose-built rental housing is uniquely positioned to address these challenges.
Equiton has responded to these market dynamics with a disciplined approach to acquisitions and financing. “We lock in our interest rates on 10-year fixed mortgages,” Lang explained. “It’s not the flashy move, but it’s the prudent one. This gives us the stability we need to grow confidently, even in markets like the one we just emerged from.”
Growth and value creation
Equiton’s focus extends to navigating rent controls and targeting properties with substantial rent gaps. “Our average rent is about 30 percent below market,” Lang said. “As we turn over units, we close that gap. It’s a key driver of our net operating income and a differentiator in how we approach growth.”
One of Equiton’s key projects is a three-tower rental development in Ottawa, with the first tower scheduled to launch in mid-2025. The city’s strong rental demand and limited supply make it an ideal market for expansion.
Navigating global economic risks
Despite optimism for 2025, global economic risks such as inflation, stagflation, and slowing growth remain. Gradual interest rate cuts are anticipated, but uncertainties underscore the importance of diversification and disciplined investment strategies.
In this environment, real estate investments, particularly in purpose-built rental housing, continue to offer reliable returns.
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