Canadian Real Estate Market Update – Q1 2024

The commercial real estate sector continues to face lingering risks, particularly within the office segment, where escalating interest rates could lead to higher capitalization rates amid global geopolitical tensions. Despite these challenges, the probability of a recovery after two years of negative performance has substantially grown, supported by the robust fundamentals of Canada’s industrial and multi-residential markets.

In stark contrast to Q3 2023, which saw the lowest quarterly investment volume in three years at C$10.2 billion, Q4 2023 marked a significant rebound with investment volumes increasing to C$12.9 billion, bringing the annual total to C$50.1 billion. This recovery highlights a substantial turnaround, positioning 2023 as the third-highest year on record for annual investment volumes. Canadian real estate, known for its resilience during economic uncertainty, continues to attract foreign investment, further supported by these robust investment figures. Oxford Economics forecasts that core Canadian real estate will lead the G7 countries in 2024 with a direct total return of 4.8%, as measured by the MSCI/REALPAC Canada Annual Property Index.

Looking ahead, 2024 could see a resurgence in investment activity from Canadian institutional and pension fund investors, driven by the prospect of easing downward valuation pressures and increased availability of capital. This positive outlook underscores the strength and attractiveness of the Canadian real estate market in the coming year.

Read our quarterly Canadian Real Estate Market Update, produced by our Strategy, Planning and Analytics team, to learn more about the current state of the office, industrial, retail and multi-residential asset classes, and what to expect for 2024.