Bullish on Real Estate: Why Multi-Family Housing is the Right Play Right Now

The rapid rise in interest rates has left many investors unsure about the future of real estate as an investment class. Central banks have tried to manage these rate changes carefully, but the ripple effect has been significant—impacting borrowing costs, slowing down investments in equipment and labor, and in some cases, even fueling inflation further. As a result, the real estate market has experienced increased volatility and uncertainty.

So, why are we still bullish on real estate?

Despite the turbulence, real estate remains a resilient asset class known for delivering high risk-adjusted returns, low volatility, and consistent cash flow. For major institutional investors like pension funds and ultra-high net worth individuals, real estate typically makes up about 25% of their portfolios—a strong indicator of its long-term value. At Waverley, we view the current environment as a strategic entry point, especially for residential assets in high-demand markets.

Canada’s Growing Need for Housing

Canada faces a pressing need for more housing stock. The current inventory of apartments is aging and has suffered from years of underinvestment. Population growth, driven by immigration and urbanization, is outpacing the availability of quality housing, creating a supply-demand imbalance in many regions. This gap presents a significant opportunity for real estate investors willing to back new developments and the revitalization of existing properties.

That’s why we’re focusing on multi-family residential development and apartment Real Estate Investment Trusts (REITs) in areas showing strong growth potential. Our current projects include developments in British Columbia and Ontario, in cities like Langford, Surrey, Waterloo, Oakville, and North York. We’re also proud to be working with the Scott McGillivray Real Estate Fund to establish a development pool for residential assets across southern Ontario.

Innovative Solutions for Homeownership

One of the most exciting developments we’re supporting is an innovative equity sharing and rent-to-own program, designed to offer a path to homeownership for prospective buyers. This unique structure allows new homeowners to build equity while renting, making it a win-win for both residents and investors. We believe this approach will be a game-changer in helping to bridge the affordability gap in high-demand markets.

Investing in High-Quality REITs

In addition to new developments, we continue to support high-quality apartment REITs, which offer investors strong, risk-adjusted returns, regular cash flow, and potential tax advantages. These REITs are focused on creating value through strategic acquisitions and property improvements or by developing new assets. With a strong balance sheet, our fund partners are well-positioned to capitalize on buying opportunities that may arise in the current market.

Why Multi-Family Residential is Our Top Pick

Currently, we favor multi-family residential assets in select jurisdictions. Multi-family rentals have a proven track record of stability, even during economic downturns, and offer good security along with predictable cash flow. The key factor driving our bullishness on this asset class is simple: more people need homes, and there are fewer places for them to live.

For example, Langford, BC—a region we are actively investing in—experienced a staggering 50% growth over the past decade, highlighting the kind of strong demand that fuels long-term investment returns. By targeting regions with similar supply-demand imbalances, we believe multi-family residential properties offer the best potential for growth and income stability.

The Bottom Line: A Long-Term View on Real Estate

While it may be tempting for investors to wait on the sidelines until markets stabilize, we see the current landscape as an opportunity. Real estate has historically provided a hedge against inflation and a reliable income stream. By partnering with experienced developers and targeting areas with significant housing shortages, we aim to generate value for our clients while contributing to the solution.

At Waverley, we remain committed to identifying opportunities that align with our clients’ financial goals and supporting the creation of much-needed housing stock across Canada. The market may be challenging, but with the right strategy, the future of real estate remains bright.