Published on and written by Cyril Jarnias
Tourism plays a crucial role in Canada’s economy, significantly influencing the country’s real estate market. This article explores in depth the close connections between Canada’s thriving tourism industry and its dynamic real estate sector, highlighting the resulting opportunities and challenges.
Canada’s Tourist Gems: Dream Destinations
Canada is filled with popular tourist destinations that attract millions of visitors each year. These iconic places exert considerable influence on both local and national real estate markets.
The Canadian Rockies: A Coveted Alpine Paradise
The magnificent Canadian Rockies, with their snow-capped peaks and turquoise lakes, are one of the country’s main tourist attractions. Cities like Banff and Jasper in Alberta experience strong real estate demand, both for vacation homes and rental investments. The region’s natural beauty and outdoor activities attract buyers from around the world, creating a dynamic and competitive real estate market.
Vancouver: The Pacific Pearl
Vancouver, with its unique blend of urban and natural landscapes, is a major tourist destination that strongly influences British Columbia’s real estate market. The city attracts many foreign investors, particularly from Asia, who see Vancouver real estate as a safe investment. This sustained demand helps maintain high prices in the Vancouver metropolitan area.
Quebec City: Old World Charm in North America
Quebec City, with its historic architecture and European ambiance, is a tourist gem that significantly impacts the local real estate market. Old Quebec, a UNESCO World Heritage site, sees strong demand for historic properties and short-term rental apartments, driving up real estate prices in the city center.
Good to Know:
Popular tourist areas in Canada, such as the Rockies, Vancouver, and Quebec City, experience strong real estate demand, which influences prices and investment opportunities in these regions.
The Domino Effect: When Tourism Drives Up Real Estate Prices
The influx of tourists in certain regions of Canada has a direct impact on real estate prices, creating both opportunities and challenges for local residents and investors.
Upward Pressure on Prices
In popular tourist areas, increased demand for housing, both for vacation homes and short-term rentals, exerts upward pressure on real estate prices. For example, in Whistler, British Columbia, a renowned ski resort, the median home price increased by 13% in 2024 compared to the previous year, reaching 2.1 million Canadian dollars.
Gentrification of Tourist Neighborhoods
Tourism can also lead to gentrification of historic or picturesque neighborhoods. In Montreal, the Plateau-Mont-Royal district, popular with tourists for its bohemian atmosphere and trendy cafes, saw its real estate prices increase by an average of 9% in 2024, pushing some long-term residents to move to more affordable neighborhoods.
Impact on the Rental Market
The growing popularity of short-term rental platforms like Airbnb has a significant impact on the rental market in Canadian tourist cities. In Toronto, it’s estimated that more than 5,000 housing units have been removed from the traditional rental market to be converted into short-term rentals, contributing to the shortage of affordable housing in the city.
Good to Know:
Tourism has an inflationary effect on real estate prices in popular tourist areas of Canada, with notable increases in cities like Whistler, Montreal, and Toronto. This trend can create challenges in terms of housing affordability for local residents.
The Rental Investment Gold Rush: Opportunities and Challenges
Canada’s thriving tourism industry offers numerous rental investment opportunities, but also presents specific challenges to consider.
The Short-Term Rental Boom
The tourism boom has led to a significant increase in investments in properties intended for short-term rentals. In cities like Quebec City or Niagara Falls, property owners can achieve rental returns significantly higher than traditional rentals. For example, in Quebec City, a well-located apartment in Old Quebec can generate up to 30% gross annual return in short-term rentals, compared to 5 to 7% in long-term rentals.
Regulatory Challenges
Faced with the explosion of short-term rentals and their impact on the housing market, many Canadian cities have implemented strict regulations. In Vancouver, for example, property owners must obtain a license to rent their primary residence for short-term stays, and renting secondary residences is prohibited. These regulations aim to preserve housing supply for local residents while allowing some flexibility for tourism.
Investment in Condotels
Condotels, these hotel complexes where units are sold to individual investors, are gaining popularity in Canadian tourist destinations. In Mont-Tremblant, Quebec, several condotel projects have emerged in recent years, offering investors the opportunity to benefit from the tourist market while enjoying professional management of their property.
Good to Know:
Rental investment in Canadian tourist areas can offer attractive returns, particularly through short-term rentals. However, investors must be attentive to local regulations and the specific management challenges of this type of investment.
The Future of Canada’s Tourist Real Estate Market
The evolution of Canada’s tourist real estate market will depend on several key factors in the coming years.
Post-Pandemic Recovery
After the slowdown caused by the COVID-19 pandemic, Canada’s tourism sector is experiencing a vigorous recovery. According to Destination Canada, international tourist arrivals are expected to return to pre-pandemic levels by 2026, which should support real estate demand in popular tourist destinations.
Sustainable Development
Canada is increasingly moving toward sustainable tourism, which could influence real estate development in tourist areas. We can expect to see more eco-friendly and environmentally respectful real estate projects, particularly in sensitive natural regions.
Destination Diversification
The Canadian government seeks to promote new tourist destinations to distribute visitor flows and stimulate economic development in different regions of the country. This could create new real estate investment opportunities in less-known areas with promising potential.
Good to Know:
The future of Canada’s tourist real estate market looks promising, with an expected post-pandemic recovery, a focus on sustainable development, and the diversification of tourist destinations. These trends could open new investment opportunities in the real estate sector.
In conclusion, tourism exerts considerable influence on the Canadian real estate market, creating both opportunities and challenges. Savvy investors who can navigate this complex landscape, taking into account local specificities and emerging trends, will be able to leverage this dynamic and evolving sector.
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Cyril Jarnias is an independent expert in international wealth management with over 20 years of experience. As an expatriate himself, he is dedicated to helping individuals and business leaders build, protect, and pass on their wealth with complete peace of mind.
On his website, cyriljarnias.com, he shares his expertise on international real estate, offshore company formation, and expatriation.
Thanks to his expertise, he offers sound advice to optimize his clients' wealth management. Cyril Jarnias is also recognized for his appearances in many prestigious media outlets such as BFM Business, les Français de l’étranger, Le Figaro, Les Echos, and Mieux vivre votre argent, where he shares his knowledge and know-how in wealth management.
