Real estate is still one of the most reliable ways to build wealth. But let’s be honest, owning properties outright remains a slog: big expenses, endless repairs, and those dreaded midnight messages about overflowing dishwashers and busted locks. Thankfully, for hands-off investors, Canada’s REIT market is alive and well, making it possible to pocket rent-like income and capital appreciation, without the headaches.

In this July 2025 update, we revisit the Canadian REIT market’s evolving landscape, recap the macro shifts since January, and deliver our fresh lineup of top REIT picks for the next 6–12 months. Whether you want steady income, growth, or a mix of both, your shortcut starts here.

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Market Overview for Late 2025

There’s been a swift swing in Canada’s interest-rate climate. After aggressive tightening, the Bank of Canada has chopped its overnight rate from 4.75% to 2.75% between June 2024 and June 2025. This has already helped grease the wheels for both commercial finance and housing, giving REITs a welcome boost.

• Rates: BoC paused at 2.75% this spring. Markets expect modest further cuts, but the easy money days aren’t rushing back yet. The stabilization alone has begun to support REIT valuations.
• Inflation: Inflation has simmered lower, with June’s headline print at 1.9%, but stickier services inflation around 3% keeps central bankers on alert.
• Growth: GDP growth is moderate but positive, Canada’s economy is set to expand about 1.8% this year, keeping real estate cash flows steady.

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Real Estate Spot Check

• Residential: Ongoing immigration and ultra-tight rental markets (especially in Alberta and BC) are driving solid NOI growth, though provincial rent controls slow how much landlords can capture.
• Industrial: E-commerce keeps underlying demand robust, but a recent build-up in warehouse space and global trade jitters have softened rents and boosted vacancies, at least for now.
• Retail: Grocery-anchored and service-based plazas have outperformed. The best are densifying with condos and offices, while older malls lag.
• Office: The “work from anywhere” era is shaking out. Urban Class-A+ buildings are finally seeing stabilization; suburban and older downtown offices stay challenged, but the wave of conversions to residential is reducing total supply.
• Healthcare & Data Centers: Senior living and healthcare remain long-term winners, but beware of leverage. Data-center REITs are rare in Canada and are hot commodities as AI and cloud computing explode.
• Fund Flows: Notably, investor sentiment has improved, money is returning to Canadian REIT ETFs, and public-market offerings have slowed, easing new supply risk.

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July 2025 Scorecard

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How We Picked Our 2025–2026 Canadian REIT Champions

We screened the entire sector for:

• Strong cash flow (low payout ratios, high FFO)
• Prudent balance sheets (low debt to asset value)
• Excellent management and proven strategies
• Geographic, asset mix, and tenant diversification
• Forward-thinking projects and real development pipelines

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Top Canadian REIT Picks for July 2025 (6–12 Month Outlook)

1. Granite REIT (GRT.UN)

• 2025 YTD Return: +9%
• Yield: 4.7%
• Why Now: A global leader in logistics real estate (Amazon, Magna, and other blue-chip tenants), Granite boasts a low payout ratio (60%) and nearly full occupancy. Growth continues via Europe/US expansions, and new development assets are already pre-leased.
• Watch For: European currency swings, global trade policy shocks.

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2. Boardwalk REIT (BEI.UN)

• 2025 YTD Return: +14%
• Yield: 2.3%
• Why Now: Driven by Alberta and Saskatchewan’s population boom and limited rental supply, Boardwalk grew FFO by 12% this year, with plenty of NAV upside left. Ultra-low payout (17%) means future dividend increases are likely.
• Watch For: Policy changes on rent controls; oil price and employment swings.

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3. SmartCentres REIT (SRU.UN)

• 2025 YTD Return: +7%
• Yield: 7.1%
• Why Now: Walmart anchors 73% of SmartCentres’ locations, a defensive asset with best-in-class cash flow and 17% year-over-year FFO bump. Its mixed-use development pipeline (urban condos, new retail, seniors’ housing) is a true asset.
• Watch For: Heightened leverage (mid-40% debt to value) and any consumer weakness.

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4. Canadian Apartment Properties REIT (CAR.UN)

• 2025 YTD Return: +6%
• Yield: 3.4%
• Why Now: 98% occupancy, steady rent increases, smart asset recycling, and new Europe divestitures make CAR.UN a model of stability. A recent payout hike underscores its healthy cash flow.
• Watch For: European vacancies, rent-regulation politics in major provinces.

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5. Dream Industrial (DIR.UN)

• 2025 YTD Return: –1%
• Yield: 6.0%
• Why Now: While industrial REITs dipped this year, DIR.UN’s long-term lease contracts, European expansion, and recent joint ventures position it for rebound potential as rates decline. A great fit for yield investors willing to ride some volatility.
• Watch For: Debt levels and currency swings; short-term softness from trade friction.

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6. RioCan (REI.UN)

• 2025 YTD Return: +3%
• Yield: 6.4%
• Why Now: Urban core assets with a growing residential and condo development business, RioCan trades at a discount to its net asset value and enjoys a strong position in transit-connected neighborhoods.
• Watch For: Leasing velocity for new non-retail and condo assets.

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7. Allied Properties (AP.UN)

• 2025 YTD Return: –4%
• Yield: 4.0%
• Why Now: Elite urban office locations, a shift toward data-centre integration, and a 69% payout ratio. Occupancy has likely bottomed, with premium assets showing stabilization.
• Watch For: Ongoing high vacancies in non-top-tier offices.

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Key Trends and Risks to Watch Through 2026

• Interest Rates: Most economists now see the BoC cutting just slightly from here, helping REIT yields remain competitive with bonds, and allowing high-quality subsectors to compress cap rates.
• Cap Rates: Industrial, logistics, and core retail should see mild cap-rate compression over the next 12 months, boosting asset values.
• NAV Growth: Top picks like Granite, Boardwalk, and CAPREIT forecast mid-single-digit growth in NAV/unit thanks to development completions and mark-to-market rent increases.
• ESG & Adaptation: Projects like office-to-residential conversions and sustainable redevelopment enhance long-term resilience.
• Risks: Trade policy shocks, inflation surprises, or a sharp funding squeeze could all quickly reshape the REIT landscape. Keep an eye on payout ratios, as sustainable dividends are your best defense.

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Spotlight: Western Canada & the Okanagan

Demand is strong in BC and secondary urban markets like Kelowna. Residential vacancy is under 2% for key assets in the region (Boardwalk, CAPREIT), while Granite’s Delta properties are standouts in industrial. SmartCentres is even kicking off mixed-use projects in Penticton, a sign the region remains on institutional investors’ radar.

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The 2025 REIT rally has rewarded patience. This is still a stock-picker’s market: quality, conservatism, and a bias to growth-oriented landlords will serve investors best as rate cuts flatten out and new development brings more choices. Stay diversified, monitor payout ratios, and target REITs with a proven track record, your shortcut to real estate returns, the easy way.

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Article Updated: July 24, 2025