Prefab Push and Policy Shifts Fuel REIT ETF Rally in Canada
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Canada’s real estate sector is seeing renewed optimism following the federal government’s launch of the Build Canada Homes (BCH) initiative, a $26 billion plan led by Prime Minister Mark Carney. The program aims to double housing starts using prefabricated construction, with $25 billion allocated as loans and $1 billion as equity to speed up modular and factory-built housing. This bold move seeks to address Canada’s housing supply crunch, and industry experts believe residential and industrial-focused REITs may be among the main beneficiaries, as the influx of prefab construction could help stabilize tight rental markets.
Positive momentum in the sector is further supported by easing external pressures. A Canadian federal court recently struck down U.S. tariffs as unconstitutional, reducing inflationary risks and potentially lowering borrowing costs—critical relief for the interest rate-sensitive real estate market. Scotiabank projects Canada’s effective tariff exposure could drop significantly to 2.6%, reinforcing investor confidence. Combined with gradually improving mortgage conditions, this macro shift strengthens the investment case for real estate assets and REITs.
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