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Investment in rental properties in Calgary nearly doubled in the first six months of 2024 – a response, according to one expert, to Calgary’s exploding population and rising rental prices.

The data comes amid the third-highest six-month streak of commercial real estate investment in Calgary since 2013, with the greatest interest in rental properties and industrial land.

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But while increased investor interest in rental properties could be a positive sign for renters fed up with rising monthly payments, Calgary continues to struggle to create the number of properties needed to meet high rental demand.

A total of $525 million was invested in multifamily housing – a technical term for rental properties – in Calgary, representing a 93 percent increase in investment volume over the previous year, according to a report released Tuesday by Calgary-based Barclay Street Real Estate.

The data comes as rents in Calgary are recovering from two years of alarmingly high increases.

According to Rentals.ca, the average rent in Calgary was $2,111 in July – a four per cent annual increase, the lowest in two years. The same report last year said Calgary rents rose a whopping 18.4 per cent between July 2022 and July 2023, one of the highest rates in Canada at the time.

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Signals that the Bank of Canada had likely reached the peak of its interest rate hikes had contributed to a positive attitude among investors in the multifamily housing market, said David Wallach, owner and broker of Barclay Street Real Estate.

According to the Canada Mortgage and Housing Corporation (CMHC), Calgary’s vacancy rate reached 1.4 percent in 2023, creating a favorable environment for investors looking to enter the market. At the same time, Calgary’s population has increased by nearly six percent in a 12-month period that ended last July

“As an investor, you want to buy properties that have good cash flow, low vacancy and increasing demand,” Wallach said. “But we also have to consider the population growth in the city, and the two go hand in hand.”

“There is demand, demand, demand.”

Nevertheless, higher investments in rental properties would not immediately be accompanied by a stabilization of rental prices, said Wallach, as rents still “have to bear the brunt”.

This is largely because population growth and overall demand for rental properties continues to outpace overall supply in Calgary – despite the increase in housing starts. Across all types of housing, Calgary saw a 52 per cent increase in housing starts between July 2023 and July 2024 – well above the national average of eight per cent.

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The trend is a marked improvement from previous years, when Calgary’s housing market was “completely in decline,” Bill Black, president of the Calgary Construction Association, told Postmedia in February. The CMHC is currently studying what Canada’s construction needs are at the provincial and municipal levels to restore housing affordability.

Overall, multifamily investment accounted for 29 percent of all commercial real estate investment in Calgary in the first half of 2024 – the largest share of any category. Just a year earlier, the same sector accounted for just 13 percent of all investment, with industrial real estate leading the pack at 22 percent.

Total commercial real estate investment has reached $1.85 billion so far this year – the third-highest half-year in Calgary since 2013, although the $2.5 billion volume in 2022 was inflated by the $1.2 billion sale of The Bow.

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