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1. Rising demand
The rental market housing supply has risen by 1% between 2016 & 2018, while the population living in rental housing (demand) has grown by 2.9% in the same period. This gap between new rental supply and demand has caused an average rent increase of 9.5% during that same period. We expect aggressive rents increasing for the next 2-4 years due to the lag time to add new supply to the ever-growing demand.
2. Year over year annual rent increase
The City of Ottawa forecasts that if current supply and demand trends continue and are extrapolated linearly for the next 13 years, there could be a rise of 3.2% YOY (year over year) annual rent increase. We think that’s underrated, in the near future.
3. Population increase
The City of Ottawa forecasts a 24% increase in population between 2016 and 2031, or an annual 1.6% population growth. If current construction rates continue (5600 new dwellings including 77% to homeowners, and 23% to rental units) there could be a gap of 18,000 rental units by 2031.
4. Supply growth is needed
There needs to be a supply of 2570 new dwellings per year inside the greenbelt to meet the forecasted housing demand. This is a need for a 1% YOY supply increase till 2031. While the current and natural supply growth rate is half at 0.5% YOY annually. This means that if supply doesn’t double, rental and house dwelling prices, rents and value will continue to rise sharply over the next 15 years.
5. Student rentals
The Real Estate Intelligence Network (REIN) estimated there is a need of over 21,000 student beds needed to meet the current demands. As a result, rents and demand for student rental will continue to stay high.
6. Tech smart buildings
We, and other strategic landlords, are designing our new multi-family buildings to have separate meters for all utilities, and tech smart buildings. The cost to implement these changes today on a new build are relatively cheap. This approach adds flexibility in the future for who is responsible for paying which utilities (tenant or landlord).
7. Water costs paid by tenants
We expect the emerging trend that tenants will soon be paying for their water costs in the near future, on renovated or new build properties.
8. Insurance costs increase
Insurance costs for multi-family properties are increasing 20%-300%, due to high insurance losses in Western Canada absorbed by the national insurance companies. Expect this high cost to be absorbed by all landlords.
Now is one of the best times to upgrade, build, and own multi-family rental properties, to capture the increasing rents. We can help you make it happen. Contact us today to get started.