Recent data from the CMHC indicates that the level of housing starts across the province has been the worst in 25 years for any month of June. So where and how can investors find a silver lining in those types of news? 

The recent decrease in residential construction across the province of Quebec, notably in Montreal, as reported by the CMHC, may initially seem disconcerting. However, this presents a unique opportunity for the commercial real estate and multi-family property markets. Let’s cut straight to the chase and explore how this trend could potentially boost the value of your investments.

Firstly, as residential construction diminishes, there will likely be an increased demand and upward pressure for existing properties and rental units. This increased demand should result in higher rental rates, thereby increasing the yield on multi-family properties and help to offset some of the damages done to a portfolio by the recent rate hikes. Investors, this is your cue to capitalize on the situation and have a plan in place for the acquisition or inclusion of multi-family properties in your asset allocation that can promise high returns in the near future.

Further, the reported decline is largely attributed to a significant decrease in the construction of multiresidential properties. As an effect, the supply of these types of units will decrease relative to existing demand on the market. This, coupled with a growing population, will trigger a surge in demand and consequently, an increase in the value of multi-family properties. This is an opportunity to reposition any of your assets, plan ahead for your financing and cater to this new market dynamics.

Despite the initial decline in residential construction, the report suggests an 18% acceleration in the pace of construction from May to June. While a complete recovery will take time, this suggests a positive trend as new properties will eventually hit the market. Commercial developers and investors, take note: this rebound has the potential to be a possible surge for the commercial real estate market.

Finally, the increase in land sales in June, particularly in the Montreal region, points towards future construction and development. These are leading indicators that point to an uptick in commercial construction activity in the medium term, offering us a chance to make strategic land acquisitions today.

In conclusion, although the dip in residential construction initially appears concerning, it unveils an array of opportunities in the commercial real estate and multi-family property market. Remember, in real estate, one’s challenge is another’s opportunity. Let our team at Votre Equipe Immobilier help you leverage these market dynamics and strengthen your portfolio and enhance your profitability.

Call us today to book a strategy consultation.