Why Invest in Apartment Buildings in the Montreal Market?
Among the Canadian Census Metropolitan Areas (CMA), that is, areas with a population of more than 100,000 residents, the Montreal market is one of the most active for apartment buildings and, more specifically, for privately initiated rental apartments of three units and more. According to last spring’s Canada Mortgage and Housing Corporation (CMHC) rental market statistics, there are 34 such CMAs in Canada. The Montreal CMA houses over 50% of the inventory of such buildings, thus more than half of the total inventory. To use exact numbers, it houses 61,349 out of 119,378 of these buildings, which represents 30% of the doors in the universe of dwellings (477,517 out of 1,584,496).
Why is that? It’s all about demand as tenants favour renting over buying in the Montreal market (Source: CMHC). When we look at the average rent for a bachelor in Montreal in April 2013, it is significantly lower ($573 per month) than in the other 34 Canadian CMAs ($671 per month). If we look at rents for 1-bedroom, 2-bedroom and 3-bedroom units, we notice similar gaps in the average rent. In the 34 Canadian CMAs, the average rent is $821 per month for a 1-bedroom unit, $913 per month for a 2-bedroom unit and $1,075 per month for a 3-bedroom unit. In the Montreal CMA, the average rent is $652 for a 1-bedroom unit, $719 for a 2-bedroom unit and $908 for a 3-bedroom unit. With such low rental rates, it makes a lot of sense for tenants to continue renting in the Montreal CMA, hence the high demand for rental units.