Downtown Is Back (sort of)

😬 Canada’s $30B Real Estate Lockup

Source: Bloomberg

The 411: Canada’s private real estate market is under strain as billions in investor capital are locked behind withdrawal limits, exposing how “liquid” real estate products can quickly freeze when markets turn.

• Roughly C$30 billion (about US$22 billion) is currently frozen as Canadian private real estate funds restrict or halt investor withdrawals.

• Nearly 40% of Canada’s ~C$80 billion private real estate fund market now faces some form of gating

• Gating is when an investment fund temporarily restricts or suspends investor withdrawals to prevent forced sales of assets (such as real estate) during periods of heavy redemption demand.

• Many fund managers have not provided clear timelines for when withdrawals will reopen, leaving investors trapped.

• These funds are a key source of financing for construction and development loans, so frozen capital risks slowing new housing supply.

• Some managers have fully suspended redemptions, while others cap monthly withdrawals or cut distributions, showing stress across different strategies.

Why This Matters: This isn’t just an investor problem. Private real estate funds are a major source of financing for housing construction and development, so when capital gets stuck, fewer projects get built, supply stays tight, and housing affordability pressures linger. For investors, this means if they have planned to use or reallocate their capital, and suddenly it becomes inaccessible, it undermines trust and forces investors to rethink how much risk and illiquidity they are actually willing to accept in private real estate going forward.

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