Canada’s real estate market remains deeply challenged: Although 2026 isn’t expected to deliver a rapid rebound, there is growing recognition that the next cycle will not mirror the last. Instead, the industry is entering a generational transition that demands new strategies, partners, and capital sources, as well as a fundamental modernization of how companies operate.
A record-breaking crowd of more than 500 real estate leaders heard the “balanced but cautiously optimistic” 2026 outlook at the 21st Annual “ULI Toronto Trends in Real Estate” event at the Fairmont Royal York hotel. PwC Canada and ULI discussed the Emerging Trends in Canadian Real Estate 2026 report against the stark backdrop of the first major market downturn in 25 years, one exacerbated by United States–imposed tariffs, higher unemployment, lower immigration, and reduced consumer confidence.
The report, informed by Canadian industry leaders’ survey responses and interviews, highlights market trends, favored locations, and property sector opportunities. It captures a sector inching forward from last year’s near standstill, even as uncertainty, high costs of capital, and shifting market fundamentals continue to shape expectations.
Full Report: Emerging Trends in Real Estate® United States and Canada 2026
Many survey respondents see 2026 as a year requiring groundwork to position themselves, innovate, and retool for a market that is sure to look very different from the past.
“Canadian real estate is at a pivotal moment,” said Fred Cassano, partner, national real estate leader at PwC Canada. “By embracing new approaches and partnerships, we have a tremendous opportunity to build the spaces our communities need and unlock growth throughout the market.”
Housing continues to be the sector’s most pressing issue, with affordability and supply constraints affecting homebuyers, renters, and the entire real estate ecosystem’s health.
The extent of the affordability crisis was underscored in the event’s opening address by Coleen Volk, president and CEO of the federal government’s housing financier and program delivery vehicle Canada Mortgage and Housing Corporation (CMHC): In Toronto, the lowest 20 percent of income earners can afford only 1 percent of apartments.
Recent policy shifts and government incentives are beginning to support new rental and affordable housing development. The federal government’s launch of Build Canada Homes represents a significant commitment to accelerating housing supply by providing funding and policy tools to enable below-market and purpose-built rental construction nationwide.
Lee-Anne Kovacs, partner, Real Estate and Retail, PwC Canada; John-Bosco Agbasi, managing director, Fengate Asset Management; Colin Baryliuk, Chief Investment Officer, KingSett Capital; Ugo Bizzarri, managing partner and CEO, Hazelview Investments; and Kathy Black, head of real estate development, Fiera Real Estate Canada, speaking at a ULI Toronto event.
(ULI/Shiraz Ali | www.shirazali.ca)
Industry response to November’s federal budget, however, decried the narrow application and modesty of funding allocations to address the housing crisis.
Brad Carr—CEO, Canada for Mattamy Homes—offered a broader perspective: “I’ve shifted to ‘it’s a consumer confidence crisis.’ There are so many things impacting people’s lives that are much broader than affordability, happening at a global, national, and municipal level. It’s creating an environment where people are reluctant to make major life decisions. “One of the things I don’t know [that] we talked enough about this morning is how interconnected housing is with jobs,” Carr said. “If people are worried about their job, they’re not going to buy a house.”
Beyond housing, real estate is transforming from a pure asset play to an enabler of economic transition. Grocery-anchored/open-air retail continues to outperform; seniors’ housing and medical office gain momentum as demographics and policy measures shift care delivery; self-storage benefits from densification; industrial remains solid with a tilt toward small-bay assets; and data center opportunities persist where power and land can be secured via partnerships.
The annual list of markets to watch has Calgary sustaining its number one position, supported by its affordability, approvals, and operational innovation (including AI-enabled operations). It’s followed by Toronto (bifurcated by product and submarket), Edmonton, and Ottawa, with Vancouver landing in eighth place, behind Montreal, Saskatoon, and Halifax. Vancouver was downgraded from last year amid softer condo presales, rising rental vacancy, and a near-term population slowdown.
Vancouver’s ranking didn’t align with panelists’ views, though: “There is a challenging planning environment in Vancouver,” said Colin Baryliuk, chief investment officer, KingSett Capital. “Lots of social issues. But . . . at the end of the day, you’ve got a land constraint there that you’ve always had—you’ll always have. And it’s a gorgeous place to live. People love living and working there.”
The report outlines trends in Canadian real estate for 2026, including:
- Reinvention is key to driving future growth
- The dealmaking playbook is changing
- The decisive shift toward rental
Reinvention is key to driving future growth
Canadian real estate is entering a reinvention era. The industry’s intersections with energy, technology, and health care—how we fuel, care, and compute—are reshaping the sector, as partnerships across these industries unlock new value sources and drive the next wave of growth.
Innovative construction methods are central to accelerating supply, particularly prefabricated and modular housing, and especially if financing and policy adapt. New models such as equipment and inventory finance, bulk procurement/first-buyer programs, and streamlined codes are critical to scale beyond pilots.
Canada Mortgage and Housing Corporation’s Volk underscored innovation, referring to CMHC research showing construction industry productivity is no better now than it was in the 1970s.
A new playbook in dealmaking
Although distress-driven transactions—particularly ones involving land and development assets—have increased meaningfully, deal activity is broadening beyond these constrained segments.
Fueling cautious optimism are creative deal structures such as performance-based land pricing and vendor take-back financing (VTB), new sources of capital—including private REITs, family offices, infrastructure funds, and private debt—and a narrowing gap between buyer and seller expectations.
Panelist Kathy Black, head of real estate development at Fiera Real Estate Canada, said, “I think 30 percent of the projects we invested in in the last 18 months . . . was with a VTB.”
Decisive shift toward rental
For institutional investors, family offices, and global capital looking for scalable, impact-driven opportunities, the Canadian purpose-built rental market isn’t just a defensive play—it’s a growth engine for the next decade.
“The condo market is in a structural reset, pivoting capital and capacity toward purpose-built rental,” Cassano said. “But in a world of expanding rental stock and declining rents, operating excellence will drive ROI and hopefully fuel the future returns.”
From an underwriting point of view, “Rents are likely . . . to drop a little bit more in 2026,” said John-Bosco Agbasi, managing director at Fengate Asset Management. “If you’ve underwritten zero and then two in [2026], you might be several hundred basis points off in the front end. But the good news is in the back end of that model, as you get into ’28, ’29, you’re going to see outsized rent growth.”
AI as disruptor and enabler
Canadian survey respondents voted AI as the top disruptor (67.2 percent) for 2026–2028, followed by construction and labour pressures (64.1 percent), with close to half of respondents (45.5 percent) ranking geopolitical instability third.
Companies are leveraging AI to realize measurable gains in leasing, pricing, maintenance, and security. Quebec’s Law 25 set a high bar for data governance, whereas agent AI emerges as the next frontier by compressing transaction timelines and demanding stronger privacy and compliance guardrails.
“We’re very much focused on venture capital firms that are using AI to improve our construction methodologies,” said Ugo Bizzarri, managing partner and CEO at Hazelview Investments. “For example, once you build a building, you need to figure out where the leaks are or where the insulation didn’t work. Now you have a drone that scans the whole building and tells where you’ve missed. You don’t have to fix the whole building. You know exactly where the leaks are.”
The outlook for best bets?
- Purpose‑built rental—trade near‑term yield for long‑term growth
- Senior housing—scale proven models and invent new ones for shifting preferences
- Industrial/storage/data centers—capitalize on the new economy’s physical footprint
- Retail—strong tenant demand, necessity‑based and experiential formats drive steady returns
