Last Updated on October 24, 2023 by Neil Sharma
Calgary’s real estate market, like the city’s economy, is reeling, but there are opportunities for investors provided they look in the right places.
“Since COVID, and even before here in Calgary, there was a real push out to the suburbs because people weren’t as interested in living downtown,” said Natasha Phipps, a sales agent and investment specialist with CIR Realty. “Everyone’s moving to the suburbs, and even the smaller communities around the city, so it’s making the downtown vacancy issue worse.”
However, communities on the city’s periphery—like Walden and Seton in Calgary’s southeast quadrant; Cornerstone, Redstone, and Savanna in the northeast quadrant; and even the master-planned Sirocco at Pine Creek community—offer stable investment opportunities with healthy rental demand.
“Calgary’s suburbs offer the best cash flow in suited properties, like duplexes and fourplexes,” said Phipps. “There’s not a lot of density in the suburbs, and historically speaking, those property types are the best for cash flow.”
In particular, added Phipps, multi-residential properties that are either renovated or newly built unsurprisingly appeal most to renters, although townhomes aren’t optimal on their own if cash flow is the goal. Moreover, landlords with at least five doors can secure commercial financing.
“For row houses, if we’re talking about duplexes and fourplexes, that’s where investors here in Calgary are looking. If you’re looking at townhouses, the numbers aren’t as great because there’s no secondary source of income, like in a basement suite. Investors interested in multifamily likely want to use commercial financing, which means they need something with five or more doors, which is also possible in suburban Calgary.”
Investors can package their units into five-plus doors with suited properties that are attached, or even in a condominium building. For either of these strategies, Phipps advises looking to the suburbs, unless the intention is only to buy low.
The city’s core is oversupplied with condos that aren’t carrying well. A major reason is that a few developers recently scrapped plans to develop condominiums in favour of purpose-built rental buildings.
“The core’s vacancy is rising because of oversupply, therefore, rents are dropping and developers are providing crazy incentives, as well, to attract people to the downtown,” said Phipps. “But in the suburbs, rental pricing has been stable over the last couple of years, even seeing some increases, and the vacancy rate is 3-4%, which is healthy.”
According to Croft Axsen, owner of Dominion Lending Centres Jencor Mortgage Corporation, Calgary is receiving a lot of attention from out-of-province investors looking to capitalize on the city’s comparatively affordable stock of housing.
“They’re trying to buy small multifamily properties, or duplexes, or five or six townhouses and turn them into rentals,” he said. “People who are still working have good incomes, so the rents are pretty good relative to purchase price.”
Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.
