Canadian Apartment Market

Like the Canadian climate, the Canadian apartment market is a land of extremes. The Canadian apartment universe is fractured and in many cities too small for institutional investment or scalability.

If we define institutional quality buildings as 200+ units, then there are only 691 buildings in Canada that match this criteria in the 18 cities we reviewed.

This puts restrictions on the number of buildings that could be available for purchase by institutional apartment investors. It also means that choice is limited and investors may have to wait for a while to get the right properties they need for their portfolios. As the industry consolidates, growth through acquisition is going to become more difficult. Investors will need to go down-market or build new apartments.

While Toronto and Montreal are the two largest apartment markets in Canada, the two could not be more different. The Montreal apartment market is the largest in the country, containing over 56,000 apartment buildings. However, since most buildings are small in size, consolidation would be a challenge. By comparison, Toronto has just over 7,000 apartment buildings however over 330 of these buildings contain more than 200 apartment units.  This makes Toronto a much more attractive investment community for institutional apartment investors.

Investors therefore need to focus on where properties are located in Canada. For example, it would surprise most apartment investors to realize that Hamilton (Ontario) has more units and larger buildings than Calgary (Alberta).

It should be noted that both cities have a similar sized apartment universe, but very different populations—Calgary is 1/3 larger. Although Hamilton has approximately 2,000 more apartment units than Calgary, it has nearly 800 fewer apartment buildings. And, while Calgary’s population grew by 13.4% from 2001 to 2006, Hamilton showed virtually no population growth over the same period.

Learn more about the Canadian Apartment Industry today.