Multifamily

June 2024 set a record in Quebec’s multifamily housing market, with 2,751 transactions completed over a 12-month period. This represents a 25% quarterly increase and a 31% annual growth!

The investment volume is equally impressive: $5.22 billion was transacted between July 2023 and June 2024, marking a rise of over 48% compared to the same period the previous year.

This surge in the market is primarily attributed to the June 25, 2024, deadline, marking the implementation of an increased inclusion rate for the calculation of capital gains taxes. This tax change prompted investors to finalize their transactions before the deadline. Additionally, recent updates from CMHC on mortgage insurance for multi-residential buildings, along with new conditions for the APH Select program, encouraged many property owners and real estate investors to submit their financing and refinancing applications to take advantage of criteria set to be revised.

For active investors with accepted purchase offers in Q1 and Q2 2024, multifamily properties were particularly profitable at the time of financing disbursements in June. The median cap rate for multifamily properties in June 2024 was 4.21%, compared to 4.05% twelve months earlier. Property appreciation followed the same trend, with the median price per unit (PPU) reaching $145,000 in June 2024 across the province, reflecting an 8% increase in one year. This marked an excellent return for sellers who managed to navigate the challenges of the past year’s mortgage market.

Office

The office market also saw significant growth last June, with 487 transactions over a 12-month period, marking a 6% quarterly increase and a 39% annual rise across the province. Transaction volume, however, grew more modestly, increasing by 1.34% year-over-year to reach $945 million by the end of June 2024.

Notably, the valuation per square foot for office buildings experienced substantial growth. In June 2024, these properties were selling at $250 per square foot, up from $196 the previous year—a 27% appreciation in just one year for this class of asset. This increase can be attributed to a resurgence in transaction activity among owners facing mortgage renewals or those opting to divest assets to reallocate capital into other sectors.

Industrial

In June 2024, the industrial market saw a 10% quarterly increase in the number of transactions and a 22% rise in investment volume, totalling 801 transactions over the past 12 months. However, both indicators show a slight decline on an annual basis. Despite this, industrial properties experienced solid appreciation, with the median price per square foot reaching $180 province-wide in June, marking an annual increase of nearly 6%. Operating businesses and owner-occupants were notably active, willing to pay higher values compared to recently sold comparables.

Retail

In June 2024, the retail real estate market saw a nearly 18% quarterly increase in the number of transactions and a 15% rise in investment volume, with a total of 1,014 transactions over the past 12 months and $1.94 billion invested. However, on an annual basis, the 12-month cumulative investment volume decreased by 3.5%. Retail commercial properties experienced slight appreciation in recent months, rising from $224 per square foot in June 2023 to $228 per square foot in June 2024 (median price over the past 12 months).

Land

The number of land sales over the past 12 months increased by 32% year-over-year across the province, reaching 3,264 transactions in June 2024. Similarly, investment volume rose by 28% during the same period. However, the average price per square foot of land sold decreased by 4%, from $55 in June 2023 to $53 in June 2024.