Plaza | 113.5m | 33s | Cantiro | GEC

I don't think a decline in people coming to Canada will affect the numbers leaving Southern Ontario. That will probably continue to increase.

Any deficiencies in purpose built rentals will be made up with investor condos. No difference from a basic rental accommodation perspective.
 
I was referring to the next year. Isn't the incentive program primarily for office conversions? I’d expect most of those projects to move forward.

In 2024, there were 11,505 multifamily starts, a 27% increase over 2023. Given that, I expect 2025 starts to moderate closer to 2022/2023 levels—which is still a significant number. That said, I could be completely off and overestimating the impact of the immigration policy.

But if you're a rental developer, how do you underwrite apartment rents two years out? What interest rate do you assume for your takeout mortgage? Rents have already dropped about 10% in the past six months, and bond yields remain highly volatile, with significant uncertainty around where the economy is heading. Right now, there aren’t a lot of strong indicators or incentives for developers to build more rentals.

I've spoken with several developers, and opinions are mixed. Many are moving forward, assuming they'll achieve rents similar to today, while others—myself included—are taking a more defensive approach and scaling down.
So you're correct that the incentive program is mostly for conversions, but Cantiro took advantage of the subsidies for demolition of vacant/underutilized buildings as part of their project, and also are providing some non-market housing. Not sure how these agreements are structured, but I assume that Cantiro would need to pay back the subsidy they received to demolish those old buildings if they decide not to proceed within a certain timeline.
 
I think given the massive growth the last couple years, that Calgary is going to be playing catch-up for a few years, even if immigration all but stops. The x-factor is what the Mango Mussolini does to kneecap our economy. If we can somehow quickly start on a west-east pipeline, I can see Calgary booming a bit again.
 
I assume that Cantiro would need to pay back the subsidy they received to demolish those old buildings
They have received no money for the demolition. They only get the money when the building is done. Otherwise you'd have landowners taking down underused buildings and paving parking lots.
 
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There's also this...


You can adjust your targets but that's all they are, just targets.

Desjardins estimates the number of new NPRs in Canada was likely down by around 468,000 year-over-year in 2024 — 25 per cent lower than in 2023. It says this was largely due to a drop in new international students of roughly 280,000 (38 per cent).

But despite the drop in new NPR arrivals, Valencia and Bartlett write that “net NPR numbers rose by almost 40,000” by the fourth quarter of 2024 — 100,000 more than both Desjardins and the government had previously forecast, and 140,000 more than numbers modelled by the Bank of Canada.


That first number is "net", and these numbers also don't factor in the fact that people whose time has expired actually leave.
 
I think given the massive growth the last couple years, that Calgary is going to be playing catch-up for a few years, even if immigration all but stops. The x-factor is what the Mango Mussolini does to kneecap our economy. If we can somehow quickly start on a west-east pipeline, I can see Calgary booming a bit again.
The silver lining in all this is Trump's loony pronouncements and general unpredictability are having an unexpected benefit in that he's highlighted our overdependence on the US market, and all parties now seem onside with ideas like pipelines to access overseas markets, developing LNG, taking down interprovincial trade barriers, building trade alliances with other countries and other things we should have been working on a long time ago. Unfortunately, I feel like Canada needed a big kick in the ass to start trying to get some of these things done.
 
I agree, we could and should have the largest GDP per capita on the planet, but we spent a century bending over for the fckers down south basically handing over our resources. Developing new trade networks will be nothing but good for us. Doesn't mean we trade any less with the states, just more with everywhere else. Which will also make our commodities more valuable, not being sold worldwide at an absurd discount like we do for the US.
 
There's also this...


You can adjust your targets but that's all they are, just targets.

Desjardins estimates the number of new NPRs in Canada was likely down by around 468,000 year-over-year in 2024 — 25 per cent lower than in 2023. It says this was largely due to a drop in new international students of roughly 280,000 (38 per cent).

But despite the drop in new NPR arrivals, Valencia and Bartlett write that “net NPR numbers rose by almost 40,000” by the fourth quarter of 2024 — 100,000 more than both Desjardins and the government had previously forecast, and 140,000 more than numbers modelled by the Bank of Canada.


That first number is "net", and these numbers also don't factor in the fact that people whose time has expired actually leave.
Thanks for sharing. I hope you and Desjardins are right. I anticipate that after the election, immigration targets may be adjusted upward for 2026 once the government claims victory in making housing more affordable in 2025. Uncertainty remains a challenge for investors and developers, making it difficult to justify significant capital risk when so many external factors can undermine success. I’m proceeding with a few projects, but my poorly performing crystal ball is telling me to underwrite rents down 15% from where they were six months ago and assume interest rates 25 basis points higher than they are now. With these adjustments, project feasibility is getting very tight. Curious if anybody thinks these assumptions are unreasonable and why?
 
Thanks for sharing. I hope you and Desjardins are right. I anticipate that after the election, immigration targets may be adjusted upward for 2026 once the government claims victory in making housing more affordable in 2025. Uncertainty remains a challenge for investors and developers, making it difficult to justify significant capital risk when so many external factors can undermine success. I’m proceeding with a few projects, but my poorly performing crystal ball is telling me to underwrite rents down 15% from where they were six months ago and assume interest rates 25 basis points higher than they are now. With these adjustments, project feasibility is getting very tight. Curious if anybody thinks these assumptions are unreasonable and why?
I'm no economist, but I would think that projects of this scale would consider the market over a longer period of time then just the next year or two, no?
 
I agree, we could and should have the largest GDP per capita on the planet, but we spent a century bending over for the fckers down south basically handing over our resources. Developing new trade networks will be nothing but good for us. Doesn't mean we trade any less with the states, just more with everywhere else. Which will also make our commodities more valuable, not being sold worldwide at an absurd discount like we do for the US.

Trump has habitually blown through budgets with his business endeavours and as the first term as President. I don't know what his end game is with the deep cuts and tarriffs (taxes that aren't called taxes) as balanced budgets would be a dramatic shift for a 78 year old still reminiscing about the carefree 1980s. Then there is Trump will always put Trump first and the guy is the most open and honest politician there is. Maybe the end goal is funding for a loony real estate transaction buying like Greenland or taking over Canada, Panama or, Gaza.

The blame is on us. Those networks have already come to us to join numerous times. We declined every time not because it wouldn't enrich the lives of Canadians and the world from despots but, it didn't fit that Canada is better than everyone else narrative.
 
I'm no economist, but I would think that projects of this scale would consider the market over a longer period of time then just the next year or two, no?
Yes, long-term trends are considered but if a project doesn’t make financial sense in the first couple of years it’s very risky to proceed based on the hope that rent growth will outpace expense growth.

Most rental developments today are highly leveraged through CMHC programs so mortgage payments are the largest expense by far. Developers typically lock into a 5 or 10 year interest rate upon stabilization so near term interest rate assumptions play a major role in feasibility.
 
Yes, long-term trends are considered but if a project doesn’t make financial sense in the first couple of years it’s very risky to proceed based on the hope that rent growth will outpace expense growth.

Most rental developments today are highly leveraged through CMHC programs so mortgage payments are the largest expense by far. Developers typically lock into a 5 or 10 year interest rate upon stabilization so near term interest rate assumptions play a major role in feasibility.
I guess I'll give a lame answer and say it depends on where in the project lifecycle you are. If it is early days, I move forward but if you're looking a breaking ground I would hold off. There is going to be whiplash in the first year of trump and the first year of a new canadian government. By the end of this year there will be a better read on the next three and you should be able to do some more reliable forecasting. That year, 2026 there are US midterms, which will be another big shift and adjustment. It is one thing to diversify off the US but that will take decades so they really stir our drink.
 

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