3 Top Real Estate Sector Stocks for Canadian Investors in 2025

The Canadian real estate sector could see modest growth in 2025, but its long-term secular demand remains intact.

Puja Tayal

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Puja Tayal grew up in a small-business family where dinner conversations often centred on working capital and savings. Her early experiences with investing, particularly during the 2008 financial crisis, shaped her approach to understanding markets and evaluating investment opportunities. She began her career at a mutual fund company before moving into investor education and financial writing for asset and wealth management firms. Before joining The Motley Fool, Puja wrote for Market Realist, where she extensively covered the semiconductor industry. Her published work has also appeared in The Indian Express. Puja believes every stock has a story that can help investors understand its potential returns. She combines business analysis with different investing approaches to help investors make informed decisions and align their portfolios with their long-term financial goals. Outside of finance, Puja enjoys long drives, catching up with friends, watching superhero and science-fiction movies, and managing her family portfolio. She also has a keen interest in artificial intelligence and its potential to reshape the world.

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Bachelor's degree in Accounting and Finance, University of Mumbai (2007)
CFA Level I

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Qualitative company analysis, management strategy, risk assessment, long-term investing, portfolio diversification and rebalancing, dividend reinvestment, cyclical growth opportunities, compounding strategies, growth stocks, and dividend stocks.

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Published February 7, 2025 4:50 pm EST

Canada’s real estate sector saw a recovery in the last quarter of 2024 as house-buying activity picked up. The demand was driven by interest rate cuts by the Bank of Canada. According to the Canadian Real Estate Association’s 2025 housing outlook, December 2024 sales were 13% higher than in May, a month before the rate cut. However, the reduction in immigration, the looming trade war, and an increase in inflation could offset the positive impact of a rate cut and slow the house-buying activity in 2025.

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Top real estate stocks for 2025

However, a limited number of retail spaces could continue to keep occupancy levels high in the retail sector.

CT REIT

In the real estate market, retail properties generate a higher rental income than home and office. It is also because retail stores are limited in supply. CT REIT (TSX: CRT.UN) could be a good investment because of its sound fundamentals, a 75% distribution payout ratio, and an interest-only debt whose maturities are spread over four years.

CT REIT has enjoyed an occupancy rate of more than 99% even under difficult economic conditions, as 90% of the stores are occupied by parent Canadian Tire and the remaining by big companies like Loblaw and Bank of Montreal. A strong occupancy will ensure regular rental income and a 3% dividend growth every July.

RioCan REIT

While CT REIT gives you exposure to retail and industrial properties across Canada, RioCan REIT (TSX: REI.UN) has a property portfolio of 186 properties, of which 85 are concentrated in the Greater Toronto Area. The Greater Toronto Area attracts high rent and has limited supply. The real estate investment trust (REIT) has a dividend payout ratio of 61.7%, giving it ample flexibility to withstand a mild recession triggered by potential Trump tariffs.

The Riocan REIT does not grow its dividends regularly or offer a dividend-reinvestment plan. However, it has room for dividend growth in the future.

U.S. real estate stock

Slate Grocery REIT (TSX: SGR.UN) can give you geographic diversification in your portfolio. While the above two REITs have a portfolio of Canadian properties, Slate Grocery REIT has a portfolio of 116 American retail properties spread across 23 states. The REIT’s 49% tenant base is supermarkets and grocers that are resilient to economic conditions.

The REIT has a 74% distribution payout ratio, hinting that it can sustain its distributions in 2025 despite economic uncertainty. The unit is trading at $13.85, while its net asset value (NAV) is US$13.77. As the Canadian dollar has depreciated against the U.S. dollar, the REIT is trading at a discount to its NAV. Slate Grocery REIT converts its U.S. dollar distributions to Canadian dollars for Canadian investors. You can lock in an 8.95% yield, which could grow as Canadian investors benefit from foreign exchange gains.