Blackstone Real Estate Group has stepped into the real estate market in Canada. Its first office in Toronto is now operating with ten full-time employees. The company is looking forward to investing in various sectors, including residential and rental properties.
Canada offers lucrative opportunities for real estate investments for a range of factors. It has a steady stream of demand driven by economic growth.
Below are the main drivers that make real estate a potential investment in the Land of Maple.
Continuous Population Growth
Canada is experiencing a population boom. It has experienced steady growth since the late 1800s.
The population reached 40 million in June 2023, up from 30 million in 1997. Immigration has become the primary source of population growth since 1995.
2022 was a groundbreaking year for the country. The population increased by more than 1 million people in one year.
It also marked the year with the highest annual population growth since 1957.
A majority of the immigrants are students, entrepreneurs, and professionals. They create demand in the residential and commercial sectors.
Canada's population is expected to keep growing in the coming years. It has become a major destination for real estate investments for potential returns.
Blackstone raised $30.4 billion for its global real estate fund this April. They can be a significant investor in shaping the country's real estate landscape in the coming days.
Commercial and Industrial Demand
Commercial markets are experiencing massive growth in Canada. Industries like e-commerce and businesses like Amazon are creating a huge demand.
The growing sectors hold a significant potential for investments. Industrial real estate is among the best bets in 2023, according to PwC.
Subcategories like warehousing, data centers, and fulfillment rank high on the list.
Logistics accounts for 80% to 90% of Blackstone's investments in Canada. They are highly focused on this sector due to its trajectory of growth.
Online shopping and deliveries will keep pushing the demand for logistics real estate. Blackstone can pump significant capital with $1 trillion in assets and strong experience in North American real estate markets.
The company is also looking to invest in data centers. They aim to connect all stakeholders through a global platform. They are already working on the agenda in the US, Japan, and India.
A Strong Rental Market
The steady inflow of immigrants increases the demand for residential housing. Among different options, multi-family rental properties are witnessing a high demand.
The growth started after a decline in 2020 and extended all the way to 2022. The total investments stood at a record high of $14.1 billion in 2021. The demand is rising due to many factors. The primary ones include shortage of space and increasing prices in urban areas.
Multi-family residential housing is also on the list of PwC's best real estate bets for 2023. Canada has several markets that promise due returns, like Victoria, Halifax, Toronto, and Vancouver.
Blackstone is aiming to expand their investments in multi-family rental properties. They want to become a part of the solution and address the housing crunch problem.
It is a significant area for the company as its current residential investments in Canada are almost negligible.
The asset manager is putting multi-family rentals on its list of long-term goals. The company wants to make the most of the recent changes in apartment construction taxes.
Developers can claim a 100% exemption from the 5% federal tax in some provinces. They get a partial exemption in other regions.
It can lower the tax on purpose-built buildings by up to 13%. This is a vital factor to attract more investment in this sector.
Canada's Market Holds True Potential
The factors above make Canada a prime destination for real estate investments. Blackstone has chosen areas with solid demand highlighted by research and statistics.
A few more sectors can be an option for investment, such as office space and grocery-based shopping centers.
Malls are falling out of fashion due to the popularity of ordering online.
Local players are also busy leveraging the favorable trends. Brookfield Corp., through Brookfield Asset Management, is a significant competitor.
Everything indicates a thriving and expanding real estate market.
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