True North, tariffed – the case for Canadian real estate

Canadian real estate remains an attractive long-term asset class because the tariff shock is concentrated, while income, valuation and stability fundamentals remain supportive.

• The base case is that USMCA continues under annual reviews and tariffs are eventually reduced; the alternative of a full US exit is considered low probability, while 50% tariffs affect roughly 5.3% of Canadian exports to the US.
• Services represent roughly 75% of Canada's C$2.3 trillion economy, while the sectors most directly exposed to the dispute account for under 2% of GDP; Oxford Economics still forecasts 0.7% growth in 2026 and 1.6% in 2027.
• Canadian real estate income has exceeded CPI inflation in nearly every year since 2000, and Canadian property outperformed the global benchmark and every G7 peer over 20 years with lower volatility than US and UK real estate.
• Capital values have fallen from their peak by 2% for apartments to 29% for offices, while Canadian Baa corporate yields near 5.7% are about 70 basis points below comparable US yields.
• Diversification is supported by weak correlations with global equities, REITs and bonds, distinct economic drivers across Toronto, Vancouver, Calgary and Montreal, and population growth expected to outpace the rest of the G7 through 2036.

Takeaway: Investors should treat tariffs as a sector-specific headwind rather than a verdict on Canada, with the opportunity resting on inflation-beating income, repriced assets, cheaper debt and comparatively stable downside risk.