multifamily investment

Multifamily investment remains red hot: JLL

Thursday, September 16, 2021

Canada’s multifamily investment volume is up 36 per cent on the 5-year quarterly average, according to JLL’s 2021 mid-year report. After a record-setting 2020, multifamily investment sales are on pace to challenge that record, reaching $5.3 billion in the first half of the year.

Locally, multifamily investment volumes in the GTA surpassed $1.2 billion by the end of June, while Montreal reached $663 million; Vancouver achieved $1.4 billion for the same period and is now on track to surpass 2018 volumes.

In terms of “most liquid asset classes”, that title goes to development land which was up by 165 per cent on its 5-year average quarterly sales volume. JLL expects that over 75 per cent of those lands will be used to develop residential apartments, residential condominiums, or industrial buildings, further underscoring the dominance of these sectors in the investment landscape.

Key trends influencing the apartment market:

  • According to JLL, all levels of government are offering programs to encourage the development of more affordable housing. CMHC will deploy up to $1.5 billion over the next year through its Rapid Housing Initiative; BC is offering low interest loans for developers; the city of Vancouver is acquiring underperforming hotels for conversions and Calgary’s Greater Downtown Plan will seek to invest up to $1 billion in office-to-residential conversions.
  • Market fundamentals are recovering, as indicated in Rentals.ca’s July Rent Report. Rents in Canada have risen through 2021, though they mostly remain below pre-pandemic levels. Toronto (-9.7% year-over-year), Vancouver (-2.8%), and Montreal (-2.6%) have seen the most softening while Guelph (+11.8%), Kitchener-Waterloo (+11.1%), and Calgary (+6.4%) have seen the strongest growth in one-bedroom unit prices.
  • To compensate for a lost year of immigration, the federal government has upped its immigration target for 2021-2023 to 1,233,000m which will reinforce the already robust demand for multifamily housing across Canada.
  • Throughout much of the past year, landlords have been offering concessions and inducements to tenants, such as a month of free rent, a new television, or a year of free wifi. With apartment demand once again on the rise and touring activity resuming pre-pandemic levels, landlords are ending these programs.

For the complete 2021 mid-year investment report, visit: https://www.jll.ca/

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