Located in southeastern New Brunswick, Moncton is one of the province’s three major urban centres. The city is the largest and fastest-growing in New Brunswick, drawing in an increasing number of out-of-province migrants and newcomers to Canada each year, as buyers and renters seek better affordability, more space, and less density. Moncton is also Canada’s only officially bilingual city, making it a prime location for call centres and schools, including the (French-speaking) Université de Moncton.
Moncton’s real estate market is hotter than it has ever been thanks to population growth, increased livability, and an expanding economy. Today’s article explains why Moncton is one of the best long-term investment cities in Canada.
- Moncton is the seventh fastest-growing community in Canada and the largest of New Brunswick’s urban’s centres.
- Since 2015, Moncton’s population has grown by more than 12,300. And between July 2019 and July 2020, Moncton’s population grew to 158,695, representing a growth rate of 1.8 percent.
- In 2018, Moncton welcomed 1,450 immigrants and newcomers. The city hopes to draw in 2,700 additional newcomers a year by 2024.
- Moncton has a low crime rate, proximity to national parks, beaches and golf courses, and touts an affordable cost of living.
- There are proportionally 10 percent more people working in Moncton’s transportation and warehousing industry compared to the national economy.
- There are proportionally 26 percent more people working in Moncton’s finance, insurance, and real estate industry compared to the national economy. Moncton has one of the largest insurance industries in Canada.
- Land in three of Moncton’s industrial parks is 80 to 90 percent sold, the fourth is about 30 percent sold, and a fifth park is slated for development within the next few years.
- Moncton’s vacancy rate dropped from 2.6 percent in 2018 to 2.2 percent in 2020.
- The City of Moncton issued a record-breaking number of building permits in 2020: $270.8-million in building permits, up from $257.4-million in 2019. Residential development made up nearly half at $133.6-million, up from $42.9-million in 2019.
- In 2020, four dozen apartment buildings holding more than 500 rental units had sold this year for a combined $47.5 million to institutional investors in Montreal, Halifax, British Columbia, and Ontario—$10 million above the assessed value.
- In 2021, Moncton’s housing market is expected to be a seller’s market, as competition for housing stock rises, causing selling prices of all property types to soar.
Population growth and livability
Moncton is the seventh fastest-growing community in Canada, according to population estimates released by Statistics Canada earlier this month. This is the second consecutive year population growth in Moncton has been within the top ten in Canada. Since 2015, Moncton’s population has grown by more than 12,300, compared to just over 8,100 in Fredericton and just under 3,500 in Saint John. Between July 2019 and July 2020, Moncton’s population grew to 158,695, representing a growth rate of 1.8 percent.
Moncton’s rising population owes to factors like the low crime rate, proximity to national parks, beaches and golf courses, and an affordable cost of living. The metropolitan Moncton area is made up of three main municipalities: the City of Moncton, the Town of Riverview, and the City of Dieppe—the latter of which is has seen the most growth thanks to first homebuyers, out-of-province retirees, and immigrants.
In 2018, Greater Moncton welcomed 1,450 immigrants and newcomers. Per the Greater Moncton Immigration Strategy 2020-2024 the city hopes to draw in 2,700 newcomers a year by 2024, in keeping with the region’s current economic development strategy.
Growing sectors for employment
Transportation and warehousing
Moncton is situated at the geographic centre of the Maritime Provinces. As such, it is known as a “hub city.” At one point, the city was home to a major shipping industry via the Intercolonial Railway of Canada, which transitioned into a major trucking industry, following the closure of the railway. Moncton is home to the headquarters of Armour Transportation Systems.
According to a report, Greater Moncton in 2030, Greater Moncton’s transportation and warehousing industry has an LQ value of 1.10. This means there are proportionally 10 percent more people working in this industry in Moncton compared to the national economy.
Finance, insurance, and real estate
According to the Greater Moncton in 2030 report, Greater Moncton’s finance, insurance, and real estate industry has an LQ value of 1.26. This means there are proportionally 26 percent more people working in this industry in Moncton compared to the national economy. Of all three sectors, insurance has banked the most growth.
Moncton has one of the largest insurance industries in Canada. The insurance sector in the Moncton has an LQ value of 2.94, so there are nearly three times as many people employed in this sector when compared to the national economy.
Moncton is home to the headquarters of two large insurance firms, Medavie Blue Cross and Assumption Life. And in the tail end of 2020, TD Insurance opened a new bilingual Client Advice Centre (CAC) in Dieppe, adding jobs to Moncton’s market.
Construction and land development
Moncton’s industrial parks are also experiencing rapid growth and development. Moncton Industrial Development develops and runs four industrial or business parks around the city, in partnership with the municipality and chamber of commerce. MID reports that land in three industrial parks is up to 90 percent sold, and the fourth is about 30 percent sold. As such, MID expects to begin work on a fifth park over the next few years.
In recent news, JessEm Tool Company has announced plans to relocate from Ontario to one of Moncton’s industrial parks. This is primarily due to the fact that construction costs in Moncton are roughly 30 percent less compared to Ontario. The JessEm Tool $5.5-million facility is one of Moncton’s largest commercial projects underway, alongside a $9.2-million Brandt dealership on Urquhart Ave.
Finally, the largest institutional development projects underway in Moncton are a $34.1-million K-8 school on McLaughlin Drive and a $25.4-million addition at the Moncton Hospital.
Real Estate Investing in Moncton
Growing demand for housing
Thanks to proactive inventory creation and low interest rates, Moncton boasts a balanced real estate market. That said, as more retirees, immigrants, and young professionals settle down in Greater Moncton, inventory is quickly getting scooped up and downward pressure is being put on vacancy rates.
According to the Canada Mortgage and Housing Corporation (CMHC), Moncton’s vacancy rate dropped from 2.6 percent in 2018 to 1.9 percent in 2019. And though 2020 saw a slight increase in the city’s rate, to 2.2 percent, it is still below what would be considered a healthy rate.
Record construction activity
To keep up with growing demand, the City of Moncton issued a record-breaking number of building permits in 2020: $270.8-million in building permits, up from $257.4-million in 2019. Of that building activity, residential development made up nearly half at $133.6-million. That’s up from $42.9-million in 2019. One major project that’s underway is $90.8-million worth of new apartment buildings representing 728 units.
Strong investor interest
Though developers in Moncton are certainly doing their part to create new inventory, national investors are in steep competition for new and existing apartment stock. As of September 2020, four dozen apartment buildings holding more than 500 rental units had sold this year for a combined $47.5 million to investors in Montreal, Halifax, British Columbia, and Ontario. This is $10 million above the assessed value via Service New Brunswick.
Below, we’ve included some notable acquisitions from the past year.
- In February, a Halifax development firm paid $30 million for in 10 multi-unit properties on McLaughlin Rd., Edmond St., Maplewood Dr. and Mountain Rd.
- In March, a Halifax numbered company paid $10.3 million for a 89-unit property on Lewisville Road. 51 percent over its assessed value.
- In June, an Ontario numbered company paid $1.55 million for two older buildings on High Street. 50 percent over their assessed values.
- In June, a British Columbia numbered company paid $3.6 million for a 30-unit building on Salisbury Road. $1.96 million over its assessed value.
- In August, a Montreal investment firm paid $775,100 for a 12-unit building on Steadman Street. $2.4 million over their assessed value.
Real estate investing in Moncton: the bottom line
In 2021, Moncton’s housing market is expected to be a seller’s market, as competition for housing stock bourgeons, causing selling prices to soar. According to the RE/MAX outlook for Moncton, average selling price will increase by 15 percent across all property types.
The bottom line is that real estate investing in Moncton shows signs of long- and short-term ROI. Rising population, economic development, and strong interest from institutional investors are some of the factors that bode well for Moncton’s real estate market in the long-term. And in the short-term, low vacancy rates mean the ability to charge competitively for rents.