Calgary is slated to have a flat rental market in 2021, says a new report.
“For the first time in decades, tenants have a lot of negotiating power, as listings increased significantly in 2020. Many tenants are no longer constrained by their commute, and seeking cheap accommodations, or more space,” Ben Myers, president of Bullpen Research & Marketing, said in the joint report with Rentals.ca, referring to most of Canada’s markets.
Like every other major Canadian market, Calgary’s rental market took a hit in 2020 because of the COVID-19-induced moratorium on immigration. According to the report, that caused the city’s apartment vacancy rate to increase by 6.6%—the highest level since 2016—despite the average rent climbing to $1,195.
Moreover, rental supply in Calgary’s primary and secondary rental markets rose by 2.5%, or 1,650 units.
According to Brett Turner, broker and founder of Calgary-based Redline Real Estate Group Inc., it is an ideal time to invest Calgary because the city’s rent-to-price ratio is very strong.
“Conventional buy-and-hold is the ideal way to manage the best risk versus return, so we have excellent rents relative to purchase price cost in our suburban markets,” he told CREW. “Just outside the inner city core, we have a nice band where properties are priced anywhere between $425,000-500,000, and you can get excellent rents in those areas and cash flow well.”
Additionally, Turner recommends properties that require renovating and refinancing because the market is replete with motivated sellers.
“We’re not a bad market to flip in, either,” he said. “You want to be in a suburban environment near the Calgary Ring Road. That seems to generate the greatest rental interest at present. Northeast Calgary or the southwest are the busiest parts for that.”
Another interesting strategy, albeit one requiring very specific conditions, is renting a unit to students near the Calgary’s colleges and universities for eight months of the year, and then putting it on the short-term rental market through the summer just in time to capitalize on tourist season.
“It only works where investors self-manage,” said Turner. “You have to be near the universities for it to work well, and with the right type of property with the right rooms for students. It could be a great arrangement for both the students and the landlord—an eight-month lease and in the summer you can take advantage of the great market activity and weather.”