A look at the emerging trends shaping Canadian real estate in2025

Current trends are in many ways emblematic of the broader shift inCanada’s real estate market since interest rates have remained higher for longer than the industry hoped or believed would be the case.

Simply put, as higher financing costs compound other industry pressures and investors weigh real estate investment against other opportunities offering attractive returns with less risk, the sector is less compelling than it was during the previous period of strong returns and cheap and plentiful capital.

But there’s also a range of other factors influencing real estate businesses and prospects in the year ahead. Challenges around housing affordability persist, highlighting an important trend that’s shaping the market and deepening the push for further policy change and a focus on innovation and productivity in Canadian homebuilding. Interviewees also cited other broad business trends, such as demographics, evolving supply and demand dynamics, and technology shifts like the rise of generative artificial intelligence, as key issues on the agenda in 2025.

Among the emerging trends are issues surrounding sustainability and climate change. Amid the growing frequency and severity of natural disasters, the long-term resilience of real estate holdings is becoming top of mind for stakeholders such as investors and regulators. An increasingly important consideration relates to insurance, with new regulations faced by insurers on climate risk management raising questions about the effect on policies and pricing.

As challenging as the current environment may be, it’s also true that real estate companies with a strong conviction about where the market is going will be in the best position to seize new opportunities.

A key emerging trend for some interviewees is the rise of niche property types and real assets.

With relatively few core office, industrial, and retail properties on the market—and limited opportunities for a significant uptick in yields—some real estate investors are taking a closer look at real assets, which blur the lines between real estate and infrastructure. These opportunities appeal to investors with a firm belief that changing consumer, technological, and business trends will create new real estate requirements.

Among the examples cited by interviewees this year were data centres, cold-storage facilities, and student housing. These niche opportunities, along with purpose-built rental housing and industrial real estate, figure prominently among the best bets in the Canadian real estate market in 2025.