Three trends that could make 2017 a bigger year for Canadian apartment investment<\/a><\/strong>\r\n <\/div>\nToronto\u2019s tech industry factors into the demand equation. Millennials working in tech have been known to move from city to city and country to country to pursue opportunities, and renting makes doing this easier.<\/p>\n
\u201cThere are several industries that would require people to relocate,\u201d DeFreitas says, noting government jobs as another example.<\/p>\n
Baby Boomers are also creating demand for rental units in Toronto, DeFreitas says, noting one project Figure 3 is doing interior design work for as an example.<\/p>\n
The Well, a large-scale, mixed-use project by Tridel, RioCan, Diamondcorp and Allied Properties coming to downtown Toronto, is targeting an older demographic for its luxury rental components, DeFreitas says.<\/p>\n
\u201cThe other thing that we\u2019re seeing with that generation\u2026 is that they want to be downtown, they want to be where the action is,\u201d he explains.<\/p>\n
\u201cSome of the younger people often think that as you get older you want to move out of the city, you want to be up north\u2026 and we\u2019re seeing that that\u2019s not the case,\u201d DeFreitas adds.<\/p>\n
While RBC Senior Economist Robert Hogue says there\u2019s no question of the demand for rental housing in the city, that alone isn\u2019t necessarily enough to spur the construction of more apartments, he suggests.<\/p>\n
\u201cIt ties their hands,\u201d says Hogue of the effect rent control has on the owners of rental properties. \u201cCertainly some builders \u2014 shortly after the rent control announcement \u2014 have been on the public record stating they would not pursue purpose-built projects,\u201d Hogue adds.<\/p>\n
Prior to the expanded rent control, which is part of Ontario\u2019s 16-point Fair Housing Plan announced in April, generally only units constructed before 1992 were subject to limits on annual rent increases. The measure now applies to virtually all units in Ontario, which limits how profitable undertaking such a project can be.<\/p>\n\n
Meantime, Toronto\u2019s condo market has shown strength, which makes building units for ownership more attractive to many developers, Ben Myers, senior VP of market research and analytics at Fortress Real Developments, a real estate development and finance company, says.<\/p>\n
\u201cDevelopment companies that were on the fence about doing rental are still going to be on the fence about doing rental,\u201d he tells BuzzBuzzNews. \u201cDoing a condo development… in a strong market, it\u2019s less risk than doing a rental. You have… revenue certainty, you have the sales in advance,\u201d he adds.<\/p>\n
Affordability issues and rent control will encourage more people to rent in the future, Myers suggests, but he adds \u201cit\u2019s hard to say\u201d just how builders will respond in the coming years. And if there is a decline in interest in taking on purpose-built residential starts, it won\u2019t likely show up immediately.<\/p>\n
In some cases, builders are too far along in the development process to cancel rental projects right now.<\/p>\n
\u201c[Rental construction will] probably at least stay fairly consistent over 2017 and 2018 but then maybe after that it\u2019ll change,\u201d says Myers.<\/p>\n
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