- What Alberta is seeing a surge of out-of-province investors in the market
- Why High yields and tight markets elsewhere are leading to the trend
- What next Population growth in the province is expected to keep interest strong
Investors increasingly are plowing capital into multifamily assets in Alberta cities, drawn to the prospect of high yields and positive fundamentals fueled by rising populations.
Since 2022, both Edmonton and Calgary have added roughly 100,000 people, and the growth is expected to continue at a healthy clip.
So far this year, there have been 20 apartment deals in Wild Rose Country aggregating about $918m, according to Green Street’s Sales Comps Database, which captures transactions over $5m. Five buyers based outside the province were responsible for just over $335m of that volume and completed many of the year’s largest deals.
Marc Rosso, a Calgary-based vice president of capital markets at Cushman & Wakefield, said the residential rental market in particular is attracting investors due to the strong growth in rents over the last year.
“We’re seeing a number of recent transactions throughout Alberta come from private capital, including family offices from B.C., Québec and Ontario looking to capitalize on strong market fundamentals and attractive debt,” Rosso said.
Patrick Harris, also a Cushman vice president of capital markets, noted that the higher interest rates of the last few years have sent investors further afield in search of higher yields.
“A lot of the low 4% cap rate deals that were available in Ontario or B.C. didn’t make sense,” Harris said. “Sophisticated buyers need positive leverage deals. So, they’re not going to buy a 4.25% cap if the cost of debt is 4.5%.”
Such acquisitions make Alberta market a better option, he added.
Meanwhile, Harris said, investors have acquisition targets to hit, and many of the deals being floated in markets like Toronto and Vancouver were not closing amid the economic and debt conditions.
But it’s been busy all around, not just for out-of-province purchasers.
Bradyn Arth, senior vice president of investments at Marcus & Millichap’s IPA division, said the Alberta market in general has been hopping this year.
“We’re crested for sure over $1bn this year,” Arth said of deals in the province. “And I think there’s already a pipeline in place for another $1bn.”
He said about 50% of buyers seem to be coming from outside of the province, with local firms still quite active.
The most noticeable change is the number of buyers from Québec entering the Alberta market, he said.
“We’re getting a lot of Québec-based investors, and that’s new,” Arth said. “A good portion, I’d say 25%, of our deals are going now going to Montréal-based buyers. That just didn’t exist up until 12 months ago.”
