The population of Niagara Falls is growing rapidly
Niagara Falls Ontario is known as one of Canada’s largest and most popular tourist area due to the Niagara Falls, an array of hotels and casinos, and proximity to the US border. Niagara Falls and its surrounding attractions bring in more than 30 million tourists every year.
Like most submarkets in the Greater Toronto and Hamilton Area, Niagara Falls’ is growing rapidly. In recent years, Niagara Falls has become a popular place to settle for newcomers to Canada, first-time homebuyers, and those being priced out of Toronto. This has led to continuous population growth. The population of Niagara Falls grew by over 10,000 persons between 2007 and 2019. And according to the last census, the city is home to 17,845 immigrants, accounting for 20 percent of the total population.
Apartment investor demand in Niagara submarkets is building up
Toronto’s affordability problems have led investors and homeowners to consider smaller submarkets for their investments, Niagara being a popular one. Cities and towns within the region have become increasingly attractive to investors over the past several years due to the fact that real estate in Niagara has outperformed much of the country and has shown resilience during times of economic uncertainty. Niagara has a robust economy, strong job creation, and—as aforementioned—a growing population aided by immigration.
The region’s growth and future promise have attracted many outside investors, subsequently driving up demand and real estate prices and drastically lowering supply. As a result, commercial and residential multi-family apartment real estate prices in the cities such as Niagara Falls, St. Catharines, and Welland are appreciating—and this is not lost on Canadian real estate investors, who are sensing the opportunities.
With submarkets throughout Niagara historically registering low vacancy rates the region is now facing a rental shortage. In other words, there is simply too much demand and no supply in the Niagara region. According to a new policy brief published by Brock’s Niagara Community Observatory, anyone hoping to rent an affordable one-bedroom apartment from Niagara Regional Housing could be facing a wait-time of a decade or more. The BNCO’s brief also revealed that, as of 2019, St. Catharines was the 10th most expensive rental market in Canada.
Moreover, the Niagara region is expected to experience a population increase of 30 percent by 2041, bringing the total population to 609,990. Ultimately, this will steepen the demand for housing even further. It is estimated that the region will require an additional 19,325 units by 2041, or 870 units annually.
Key reasons to invest in multi-family apartments in Niagara Falls
- Infrastructure in Niagara Falls will continue to grow over the next decade. The Niagara Falls Go Train will be complete in 2023 and will be located in the downtown core of Niagara Falls.
- Historically, Niagara Falls’ market has been undervalued. Development and investments in the city are just beginning.
- A new hospital is slated for construction at Mcleod and Biggar road. The new hospital will be at the center of many new communities surrounding it.
- The upcoming Niagara Falls Renewable Natural Gas plant, which is expected to be completed by the end of 2021. The $42 million facility will create jobs, stimulate regional economic development, and reduce greenhouse gas emissions in Canada. The Niagara Falls Renewable Natural Gas plant will be the largest of its kind in Ontario.
- Demand for affordable rental properties in the region is high and steeply growing. The average cost of rent is $1,028, up 4 percent from last year. Rents have risen so drastically that it presents an opportunity in commercial apartment real estate.
- Vacancy rates are at 2.3 percent. Low vacancy is just one indicator of a significant rental shortage in the region, particularly in the multifamily and rental segments.
- As developers are beginning to plan and make moves, many pieces of land are being rezoned for residential and mixed-use to accommodate the rising demand for housing. Residential communities will be developed in Niagara Falls along with a 450-acre development that will become a European style community with restaurants, hotels, retail and homes.
- Investments in Niagara Falls tend to yield worthwhile ROI. In other words, your money goes further in Niagara Falls when compared to other larger markets
- There is also significantly less competition for investments, compared to other submarkets in the GTA. There is also less investor competition for underperforming assets, in the form of under-rented apartments.
- Commercial real estate opportunities are especially promising in Niagara Falls, with cap rates offering more upside.
- Conventionally, apartment owners in Niagara Falls have owned for many years. This presents opportunities in that rents have increased so drastically and owners have owned for so long that they often have very strong equity positions and therefore will often offer a vendor take back or seller financing.