Canada’s real estate development sector is sending two very different signals at once. Institutional and private capital continues to chase new housing, student residences and mixed-use projects across the country, even as researchers and municipal officials warn that regulatory barriers and strained water and sewer infrastructure are constraining how much new supply can actually get built.
Investment Keeps Flowing Into New Projects
On the capital side, activity has been brisk. Austin-based Suntex Enterprises announced in September a Letter of Intent advancing a Canadian development partnership anchored by two Alberta projects — Royal Links in Leduc and Meridian — representing a combined $575 million in project revenue. Royal Links alone is a proposed 134-acre master-planned community with about 979 planned residential lots, including 573 single-family lots and 404 semi-detached and townhome units, plus multifamily and commercial parcels. Land development on the site is scheduled to begin in the fourth quarter of 2026, and Suntex says it is negotiating the acquisition of an established Canadian development company to build out its local operating platform. The Alberta portfolio forms part of a broader North American pipeline the company says now exceeds $1 billion over the next three to five years, including opportunities in Oklahoma, Missouri and Texas.
Cross-border capital is moving in the other direction too. The LiUNA Pension Fund of Central and Eastern Canada made its first-ever U.S. real estate development investment in September, backing a 380-unit, 25-storey mixed-use project called Julep West Loop in Chicago alongside longtime partner Fengate and local developer Mavrek. The project, which includes 76 affordable units and more than 21,500 square feet of commercial space, is targeted for first occupancy in early 2028. LiUNA chair Joseph Mancinelli called it “a pivotal milestone” for the pension fund, which has built a substantial Canadian housing portfolio with Fengate’s Social Opportunities strategy.
Student housing is another area drawing institutional interest. Harrison Street Asset Management, a major off-campus student housing provider, says it wants to expand its Canadian portfolio despite falling international student enrolment, which dropped 26 per cent last school year according to Statistics Canada. Global chief investment officer Mike Gordon said Canada’s top-20 universities face a persistent undersupply, with only one purpose-built student bed for every six full-time students — roughly half the provision rate seen in the U.S. and U.K. Harrison Street is building a 458-bed project called Symposia near Simon Fraser University with local developer Mosaic, expected to open in 2028, adding to its existing 283-bed Koto building in the same neighbourhood.
Regulation Adds Cost Before a Shovel Hits the Ground
While capital is available, researchers argue municipal rules are a major reason new supply hasn’t kept pace with demand. Writing for the Macdonald-Laurier Institute, Anthony De Luca-Baratta cites CMHC research using its Municipal Land Use and Regulation Index, which found that for every 10 per cent increase in regulatory restrictiveness, home prices rise by 14 per cent. The C.D. Howe Institute estimates a single-detached home in Toronto costs about $350,000 more to buy than to build, even allowing for a 17 per cent profit margin. In Abbotsford-Mission, Kelowna and Victoria, that gap ranges from $255,000 to $415,000, while in Vancouver it reaches $1.3 million. Nationally, the average home price rose from $163,524 in 2000 to $718,400 in 2025 — a 339 per cent increase compared with 55 per cent general inflation over the same period.
Key Figures in Canada's Development Debate
Aging Water and Sewer Systems Are Becoming a Bottleneck
Even where zoning and approvals move faster, physical infrastructure is emerging as a hard constraint. According to the 2025 National Infrastructure Assessment, more than 11 per cent of Canada’s water and wastewater-related infrastructure was in poor or very poor condition in 2022, representing an estimated $107 billion in replacement value. Tim Tierney, president of the Federation of Canadian Municipalities, called water and wastewater infrastructure the top obstacle facing his more than 2,200 member municipalities.
In Winnipeg, the North End Sewage Treatment Plant’s upgrade won’t fully expand wastewater capacity until 2032, even though the current system has only about four years of room left, according to Manitoba Home Builders’ Association CEO Lanny McInnes. Development has already been curtailed in surrounding municipalities such as East St. Paul. North of Calgary, Airdrie is using about 97 per cent of its allocated water and wastewater capacity and is now ranking priority access — schools, health care and emergency services first, housing third — while a $114-million pipeline expansion to Calgary’s system, which could support up to 45,000 new homes, moves ahead. Toronto’s Black Creek trunk sewer is similarly tied to roughly 63,000 planned homes, and Waterloo Region now requires developers to compete for limited wastewater capacity.
The Financing Gap Behind the Pipes
The Federation of Canadian Municipalities estimated in 2023 that each new home requires roughly $107,000 in municipally owned capital assets, including about $39,000 for potable water and wastewater infrastructure alone — costs municipalities have traditionally recouped partly through development charges. Robert Haller of the Canadian Water and Wastewater Association said many communities are “starting behind, regardless of new housing,” adding pressure to systems already in need of repair. Taken together, the recent wave of development announcements and the infrastructure warnings illustrate the same underlying tension: capital and demand for new housing exist, but the regulatory and physical systems needed to convert that demand into completed homes remain under strain in cities across the country.
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