Some of the largest real estate investment trust or REITs are weighing on the sector. Residential-heavy Canadian Apartment Properties REIT, known as CAPREIT, sunk 5.9 per cent in the month of November, its biggest drop in more than a year.
Beyond inflation, concerns around the Omicron variant has further dragged on retail and restaurant REITs, such as RioCan Real Estate Investment Trust. The shopping centre property owner tumbled 4.7 per cent in November, its biggest monthly drop since September 2020. Allied Properties Real Estate Investment Trust, which owns office space, lost 3.6 per cent last month.
Heading into 2022, rising rates may not necessarily continue to plague real estate firms, according to Ma. As the economy rebounds, and people return to the office and start dining and shopping, developers and property owners could see a boom from spiking activity. The sector is still outperforming this year, surging 26 per cent compared with the S&P TSX Composite Index, which climbed 18 per cent.
“The REITs have been to hell and back with the pandemic, so we’ve seen how they hold up in the worst of the worst,” Ma said. “Absent Omicron causing restrictions, this would be an opportunity for investors to augment their positions in the REITs where they see growth.”
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