Rents Support Apartment REIT Values

With the increase in apartment REIT stock prices, or for private REITs units prices, you could question what is going to support total returns over time.

On factor supporting prices is increases in rents.  If cap rates stay the same, increases in rental fees can support share and unit prices, providing some protection from inflation - something that you do not get from today's other fixed income investment.  This is the value of investing in hard assets.

CMHC publishes reports twice a year on the rental market including rents by province and market, and vacancy rates.  In Ontario, rent increased by 2.4 % in markets greater than 10,000.

Canada wide, rents increased at a higher rate, supported by western provinces.  The following table excerpt shows those provinces and the Canada-wide rent increase of 2.2%.