Through a series of research papers, investment firm Equiton is working with Concordia University’s John Molson School of Business to explore the sustained cashflows available for institutional investors in Canada’s residential real estate market alongside the impact of climate change.
“Do we see any impact on these cashflows moving forward and . . . how can we deal with this increased climate risk?” asked Erkan Yönder (pictured right), associate professor of real estate and finance at Concordia University, during a session at the Canadian Investment Review’s 2025 Global Investment Conference.
Co-presenting the session, Aaron Pittman (pictured left), former senior vice-president and head of institutional investments at Equiton, set the scene with some data on Canada’s population growth, which was 3.2 per cent in 2023 and 2.6 per cent in 2024. Additionally, the housing completions also contracted, off by about 4.3 per cent between 2023 and 2024.
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The impact of completions on the rental market can be used as a proxy for housing affordability in Canada, he said, noting a development project in Canada takes about 60 months, which will lead to a supply crunch. “If we see our developments come down [and] increasing population, we’re in for another crisis in five years.”
Turning the lens on the climate, Yönder explained the North Effect — basically, that Canada has cooler temperatures compared to the U.S. and many other locations globally. Counting the number of days that exceed 30 degrees Celsius each year, there are around 10 more extreme days in the U.S. compared to Canada, he said. “Even if we absorb increased temperatures, the extreme temperature days are less frequent than any other regions.”
With increased temperatures come more frequent climate disasters, said Yönder, pointing to data that demonstrated the rise in wildfires across Canada and the U.S. in the past decade. Alongside the increase in climate disasters, immigration decreases, he noted. “There’s a negative impact of climate factors on the demand drivers for real estate. And the proxy here is the immigration.”
Returning to the North Effect, he referred to data that showed all of the negative impacts that climate factors hold for the U.S., but there’s no statistically significant economic impact on Canada. “I’m not saying that physical risk is not there. . . . But overall, if you look at the economic impact and the impact on the demand for real estate, we don’t observe the negative impacts of climate factors for Canada. And the way we explain it is the North Effect.”
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The research paper also looked at immigration to Canada from different countries, finding that Canada attracts immigrants from countries that have more exposure to climate risk. “I think this could be protection for the Canadian markets, the demand for Canada real estate,” said Yönder. “Although we see negative impacts of climate, Canada is an attractive place for climate immigrants globally.”
From an institutional investor perspective, climate is certainly a risk factor, he said, noting it’s important to consider how to protect portfolios and deal with this risk. “The Canadian real estate market offers a diversification opportunity for institutional investors to lower the climate risk of the portfolio.”
Read more coverage of the 2025 Global Investment Conference.