A development executive made headlines this week by arguing, plainly and publicly, that Canada cannot build its way out of the housing crisis without institutional capital. Ladan Hosseinzadeh Sadeghi, president and CEO of Sky Property Group Inc., told a national audience that small developers simply don't have the balance sheets for the job. REITs and pension funds, she argued, are the only players capable of absorbing the risk, committing long-term capital, and building at the scale the country needs.

It's a tidy argument. And parts of it are genuinely true. But the framing has a flaw that tends to get papered over in these conversations, and it's worth being honest about what it is.

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The Problem Canada Actually Has

Start with the scale. CMHC estimates Canada needs roughly 3.5 million additional homes by 2030 just to return to 2004 affordability levels. Not 2012 levels. Not pre-pandemic levels. 2004. That number sits on top of stalled development pipelines, soaring construction costs, municipal approval timelines stretching five to seven years in some jurisdictions, and a labour shortage that isn't going away.

As we covered in Canada Has Been Trying to Build Its Way Out of a Housing Crisis. The Approvals System Won't Let It., the bottleneck has never really been capital. It's been the regulatory cost of deploying it. Development charges across the GTA have more than doubled in some jurisdictions over the past five years. A project that pencilled at a 4.5% lending rate and 2021 construction costs is now genuinely underwater.

Those are real problems. And the institutional capital argument sounds like a real answer.

But there's a reason this conversation makes so many people uncomfortable, and it isn't just politics.

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The Distinction That Carries All the Weight

Hosseinzadeh Sadeghi herself drew the distinction that matters most: there's a difference, she said, between a REIT that buys and holds existing rental stock and one that finances the construction of net new supply. Canada needs more of the latter.

She's right. That distinction is doing enormous work in the argument, though, and the record on which side of it most REIT activity has historically landed is not ambiguous.

Canadian REITs grew from owning essentially zero residential suites in 1996 to nearly 165,000 by 2017, according to research by housing scholar Martine August. The primary acquisition strategy for most of that period was not building new towers. It was buying aging rental stock, underpriced relative to market rents, and extracting value from the spread. Vacancy decontrol, the legal mechanism that allows rents to reset to market when a tenant leaves, is the engine of that model. The financial incentive it creates is not subtle.

When units turn over in most Canadian jurisdictions, average rents jumped 18.3% in 2022 and 23.8% in 2023, according to Canadians for Tax Fairness analysis of CMHC data. That's not a figure landlords stumble into. It's a figure some institutional landlords have, in their own investor documents, described as a core growth strategy. Centurion Apartment REIT's 2023 annual report stated plainly that it had grown same-store rents "significantly faster than market averages and inflation benchmarks." These are not hidden facts. They're disclosed to investors.

We broke down over $3.25 billion in Canadian REIT acquisitions over a single 12-month period on this site not long ago. The residential share of that activity, led by CAPREIT and Boardwalk, was buying existing housing stock. Townhomes in London. Apartment towers in Vancouver. Communities in Calgary. Not one new unit was added to the housing supply by those transactions. What changed was who held the deed, and therefore who controlled rent-setting decisions going forward.

A 2023 federal parliamentary committee heard testimony that displacing tenants allows landlords to raise rents by limitless amounts in most provinces, sometimes to four or five times the rate paid by the previous tenant. The committee heard evidence that financialized landlords were responsible for 73% of evictions in majority Black dissemination areas in Toronto between 2018 and 2021. These aren't fringe findings from tenant advocacy groups. They're sourced from academic research presented before a House of Commons committee.

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The Research Is Actually Contested

To be fair, the evidence is not entirely one-sided.

A study out of Concordia University's John Molson School of Business, using building-level data from the GTA, found that once property characteristics are accounted for, REIT-owned buildings do not charge higher rents than comparable non-REIT properties. They also found REIT-owned buildings were twice as likely to undertake environmental upgrades and secured around 74% more building permits per year than comparable properties. The argument there is that what looks like a rent premium is actually reflecting better buildings, not extraction.

That's a legitimate data point. It's worth taking seriously, and it complicates the straightforward villain narrative.

But it doesn't address the turnover problem. In-place rent increases constrained by rent control guidelines are a different thing from vacancy rent resets, which aren't constrained at all in most provinces. The Concordia study focuses on sitting tenants in regulated units. The bigger affordability question is what happens to the supply of homes that ordinary people can afford to buy or rent over a generation, as institutional buyers absorb more and more of it.

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What the Institutional Argument Actually Gets Right

Strip away the most self-serving parts of the pitch, and there's a real case that purpose-built rental development by institutional investors adds supply. When OMERS or a major REIT finances a 500-unit tower from the ground up, those 500 units didn't exist before. The housing stock is larger as a result.

That is genuinely different from buying an existing building.

The policy reforms Hosseinzadeh Sadeghi points to, faster approvals, standardized development charge deferrals for purpose-built rental, and modernized capital cost allowance rules, are also broadly correct as a diagnosis. Those barriers are real, and they apply whether the developer is an individual builder or a pension fund.

The federal government's removal of GST on new purpose-built rental construction was a step in this direction. So are the HST changes Ontario just announced on the ownership side. Reducing the tax burden on building new housing, regardless of who owns it afterward, is sound policy.

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The Question Nobody Wants to Answer Directly

But here's the thing. The case for institutional capital in housing construction is routinely packaged with the implicit conclusion that we should therefore also be comfortable with institutional ownership of existing housing stock at scale. Those two things are not the same, and the policy conversation tends to conflate them.

You can support fast-tracking REIT-funded development of new purpose-built rentals while simultaneously being concerned about what happens to affordability when a handful of large institutions control an ever-growing share of the existing rental market. These positions aren't contradictory. They're just politically inconvenient for both sides.

Financialized firms control an estimated 20 to 30% of all rentals across Canada, and 48% of purpose-built rentals in some cities. In Nunavut, approximately 80% of all private multi-family housing is owned by a single investor. The question of what tenants' options look like as that concentration increases isn't answered by pointing to a new tower going up in Mississauga.

For Okanagan buyers and renters, the stakes are local and tangible. Kelowna has been one of the least affordable markets in Canada relative to income for several years running. Institutional landlords aren't the primary factor in that, but the trend toward large-scale, absentee ownership of the housing stock that does exist here is worth watching. When the people making rent-setting decisions are optimizing for unitholder returns in Toronto or New York, local affordability is not the variable they're solving for.

The housing crisis is real. The capital gap is real. But the solution that's best for the people who live in these communities isn't automatically the same solution that's best for the investors looking at those communities from a distance. Keeping that distinction alive in the policy conversation isn't anti-development. It's just honest.

If you're navigating the Okanagan market, whether as a buyer, renter, or investor, the team at Coldwell Banker Horizon Realty works with people in this community every day and understands what's happening on the ground.