Investors targeting stable income and attractive yields are finding success in the market
Canada’s multi-suite residential rental market experienced a strong third quarter, with sales volumes reaching the highest levels since early 2022, according to a new report. The sector remains a top choice for investors drawn to stable income and high yields.
Investment in multi-suite rental properties surged to $1.8 billion in the third quarter, fuelled by increased availability of large-scale properties and portfolios, Morguard’s Economic Outlook report showed.
"The multi-suite residential rental sector remains popular with a range of investment groups seeking attractive yields and stable and rising income streams," said Angela Sahi, president and chief operating officer of Morguard. "While some buyers are waiting for borrowing costs to decline further, the continued easing of inflation and future rate cuts have created a solid foundation for Canada's real estate market to strengthen starting next year."
Supportive Canada Mortgage and Housing Corporation (CMHC) financing has also played a key role in sustaining sales momentum. Despite a slight softening in rent growth – up 5.4% year over year in September, according to Rentals.ca – demand for rental units remained solid.
While the multi-suite rental market thrived, other areas of commercial real estate showed mixed outcomes.
Industrial property investment activity slowed due to limited availability, although leasing markets saw continued oversupply.
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Meanwhile, office leasing activity in Toronto showed positive absorption of over 650,000 square feet, while Vancouver experienced declines. Tenants leaned toward shorter-term, move-in-ready subleases.
Economic indicators suggest that Canada’s economy will grow at a modest pace, with stronger performance expected in 2025 as the effects of high interest rates wane. Inflation easing in the third quarter has set the stage for continued rate cuts by the Bank of Canada, which should further stimulate housing market activity.
"The Bank of Canada's rate cuts will be crucial to the real estate sector's overall resilience, helping to drive the economic recovery from the effects of monetary tightening," Keith Reading, senior director of research at Morguard, said in the report. "As the real estate market regains momentum, investor activity will increase in the second half of 2025."
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