PwC also anticipates the growth of prefabricated and modular homes in 2026, provided the financing options adapt.
Real estate is expected to be in transition next year as companies look to find new sources of growth, with Calgary’s market emerging as a particular bright spot, according to a PwC Canada report.
The report, completed in partnership with the Urban Land Institute (ULI), said there will be a shift to rental properties in Canada’s two largest real estate markets.
“In Toronto and Vancouver, the condo reset is steering capital to rental, including asset classes like student housing. Leaders in 2026 will be companies who partner widely, adopt technology confidently and get creative in how they structure and finance deals,” Richard Joy, executive director of ULI Toronto, said in a release. “But Calgary remains a standout, with policy agility and supply delivery driving momentum.”
PwC said Calgary’s strong economy, record-breaking housing construction over the past three years and strong population growth are reasons why the city should have the strongest market next year.
Outside Calgary, PwC expects Canada’s real estate landscape to be in “transition” for 2026 because rental construction is expected to climb as developers take advantage of funding programs and pivot their projects to rental properties from condos.
“Canadian real estate is at a pivotal moment — policy momentum is building, and the sector’s ability to collaborate across industries is opening doors to new opportunities,” Fred Cassano, a partner and national real estate leader at PwC Canada, said.
“Addressing the construction shortage is essential, as its impact ripples across every asset class, from housing to retail and industrial. By embracing new approaches and partnerships, we have a tremendous opportunity to build the spaces our communities need and unlock growth throughout the market.”
PwC also anticipates the growth of prefabricated and modular homes in 2026, provided the financing options adapt.
During the 2025 federal election, the Liberals promised $25 billion in debt financing and $1 billion in equity financing to developers of modular homes as part of their housing strategy.
In May, Ontario also earmarked $50 million for companies to expand their modular housing construction capacity.
Governments believe modular housing is a means of boosting housing supply, but the strategy has its skeptics. A recent Canada Mortgage and Housing Corp. report called modular housing “no silver bullet,” in part because many communities would rather hire local workers than ship a home from another city.
The PwC report also highlights private capital, such as real estate investment trusts and private debt, will fill the gap left by constrained traditional equity and bank debt.
“This shift is fuelling innovative business models and unlocking value in key growth areas like student housing, medical offices and other alternative sectors,” Cassano said.
As for commercial trends, PwC predicts medical offices will gain momentum as Canadians age, while increasingly dense cities are a boom for storage companies.
Written by Ben Cousins
Financial Post