Canada must build about 3.5 million additional homes by 2030 just to restore 2004 affordability levels
Canada’s housing system is being asked to deliver millions of new homes with capital structures designed for smaller projects and slower timelines, according to Ladan Hosseinzadeh Sadeghi.
Canada Mortgage and Housing Corporation (CMHC) estimates the country needs about 3.5m additional homes by 2030 to bring affordability back to 2004 levels.
According to CMHC, this shortfall sits on top of stalled development pipelines, soaring construction costs and a chronic lack of new supply from Halifax to Vancouver.
Municipal approval delays, rising development charges, high interest rates and labour shortages have slowed construction just as it needs to accelerate.
Against this backdrop, Hosseinzadeh Sadeghi, president and CEO of Sky Property Group Inc., is pushing to centre Real Estate Investment Trusts (REITs) and institutional capital in the housing policy discussion.
With experience in high-density residential projects across the Greater Toronto Area (GTA), she argues that small balance sheets cannot meet the current build-out task.
Hosseinzadeh Sadeghi said Canada cannot solve its housing crisis with “small capital alone” and needs institutional partners to deliver the “hundreds of thousands” of rental and ownership units required over the next decade.
He argued that REITs and pension funds, which can commit long-term capital, shoulder development risk and build at scale, are best placed to do that, but questioned whether current regulations are bringing them in or “pushing them away.”
He said patient, large-scale capital from Canadian pension funds such as CPPIB, OMERS and the Ontario Teachers’ Pension Plan, as well as publicly listed REITs, can absorb risks that would leave individual developers exposed.
A project that worked at a 4.5 percent lending rate and 2021 construction costs can now be “deeply underwater,” she said, while big institutions can spread that risk across diversified portfolios and longer time frames.
REITs have drawn political criticism as corporate landlords, but Hosseinzadeh Sadeghi separates strategies that acquire existing stock from those that finance new units.
She said there is “a meaningful difference between a REIT that buys and holds existing rental stock… and one that finances the construction of net new rental supply,” and that Canada needs more of the latter.
When large institutional investors fund 500‑unit purpose‑built rental towers, they add supply to the market, which she called “the outcome we need,” arguing that policy should favour the activity that “creates new homes.”
Several Canadian REITs are already moving in this direction.
Purpose-built rental development has become a growing part of the REIT market as interest rate stabilization makes long-term yield plays more feasible again, and firms such as Killam Apartment REIT, InterRent REIT and Boardwalk REIT have publicly committed capital to new development pipelines.
For institutional capital to scale up, Hosseinzadeh Sadeghi points to three policy levers.
First, she stresses certainty and speed in approvals.
“Institutional investors plan in decades, but they won’t deploy capital into markets where a rezoning application can take five to seven years,” she said.
She argued that Ontario’s streamlining will only work if municipalities get on board, because the regulatory risk premium on Canadian development is “simply too high right now.”
Second, she highlights development charge reform.
Municipal development charges across the GTA have more than doubled in some jurisdictions over the past five years, and for purpose-built rental, where revenues depend on market rents rather than sale prices, these costs can make projects unworkable.
According to Hosseinzadeh Sadeghi, emerging exemptions and deferrals for purpose-built rental should be expanded and standardized across provinces.
Third, she cites tax treatment.
Canada’s current tax framework was largely designed around an owner-occupier model.
Modernizing capital cost allowance rules and removing GST from new purpose-built rental—steps the federal government has already begun—directly improves return profiles and can unlock stalled capital.
“Policy has to make the math work, or the capital will go elsewhere,” she said.
At the same time, the Bank of Canada's rate-cutting cycle has improved borrowing conditions for long-duration real estate, while federal and provincial housing programs are injecting subsidy into affordable and mixed-income projects.
“There is real appetite out there,” said Hosseinzadeh Sadeghi.
He said international pension funds, domestic REITs and long-term insurance investors all see the appeal of Canadian housing, with strong population growth, urbanization and limited supply driving demand.
What is needed now, she argued, is “policy clarity and… partnership models” that can channel that capital productively.
Sky Property Group Inc. is responding by deepening relationships with institutional partners as it expands its high-density residential portfolio across the GTA.
Hosseinzadeh Sadeghi favours collaborative structures where institutions provide capital and long-term ownership while developers contribute land, relationships and development expertise.
She said housing is “not a zero-sum game between developers, investors and renters,” and argued that institutional capital, used properly, is how Canada will close its housing supply gap.
The alternative – relying on government funding or small builders to scale – “is not working,” she said, adding that “it is time to bring serious capital to a serious problem.”
