Research Roundup: Why senior’s housing will remain the hottest REIT sector, plus top picks from a Scotiabank analyst

Daily roundup of research and analysis from The Globe and Mail’s market strategist Scott Barlow

Supply lagging demand in senior’s housing

Scotiabank analyst Himanshu Gupta outlined why senior housing will remain real estate’s hottest sector,

“10,000 units are under construction as of now, which will be delivered over the next three years. Based on demographics, 20,000 new units are required every year for the next 10 years. Even with approximately 11,000 and 17,000 units projected to be started in 2026 and 2027, this will still be below expected demand. Long-Term Care (LTC) buildout is also underway – government subsidy makes it a bigger priority over RH and offers better returns. In 2021, the Ontario government announced an ambitious plan to construct 58,000 beds by 2028 . As of April ’25, only 5,982 beds had been constructed (new+upgrades). There is a wait list of 48,000 seniors (demand) in Ontario currently, and therefore the government is forced to incentivize new construction in the LTC sector. Per 2025 Long-Term Care Home Capital Funding Policy (CFP), construction funding has increased meaningfully, e.g., maximum CFP funding per bed in GTA is now $637,500 versus only $187,750 three years ago. It will be interesting to see if this level of construction dollars (and trades) will be available to LTC and RH for the next several years – Seniors Housing is still considered alternative real estate and not mainstream... a rise in construction starts was not the catalyst for a rotation out of “hot” asset classes; it was only when occupancy peaked and market rents started to roll over, i.e., when the impact of actual supply happened. For Seniors Housing, we expect mid-single-digit market rent growth (no deceleration)"

Mr. Gupta has “sector outperform” rating on Chartwell Retirement Residence (CSH.UN-T) and Sienna Senior Living Inc. (SIA-T).

Big gas draw

RBC Capital Markets head of global commodity research Helima Croft discussed natural gas and precious metals markets,

“With some of the dust settling on gold’s volatility and epic price moves, we are once again confronted with an outlook, while supportive on a macro-economic basis, that is arguably dominated by uncertainty. It’s a factor that can cut both ways as issues arise and melt away, but, in our view, is set to remain the dominant theme over the course of 2026. We’ve previously highlighted that uncertainty takes many forms, spanning trade and tariffs, politics and government shutdowns, geopolitics and armed conflict, concerns about the Fed’s independence, etc., but admittedly a lot of this over the past year emanated from the Trump administration and the uncertainty its policies generate. What’s been most challenging is identifying a proxy of uncertainty, as different uncertainty indexes have been somewhat helpful at different times. However, it seems that Trump’s job approval may have emerged as helpful proxy – instructive for gold given a strong negative correlation (88 per cent) … The spike in volatility pushed 30d vol to its highest in our long- term dataset back through 2010, reflective of the immense nature of the spike in natural gas prices as a result of Winter Storm Fern. The spike actually put 30-day volume at nearly 5 time sthe long- term average and pushed it well above levels seen at the outbreak of the Russian invasion of Ukraine and other weather events. We have long said that U.S. natural gas markets are entering a period of elevated structural volatility, even on an intra-seasonal basis; however, we should delineate between this event and our call. Instead, in a milder sense, we believe that volatility will structurally increase as powerburn grows, LNG export capacity increases, and the call on production develops through the end of the decade. While a blip would be quite the understatement, we see where natural gas prices have settled after the rally as reflective of a more fundamentally justified level we have anticipated in our forecasts”

Evidence of AI-related productivity

Citi strategist Adam Pickett is finding evidence that AI is contributing to U.S. productivity growth, allowing growth without increases in labour,

“Sales and profit per employee across the S&P 500 has risen in recent years. This is dominated by the MAG7 but has seen some broadening lately. Total US real GDP continues to rise without a commensurate rise in NFP employment, while in the IT sector, EPS is rising while employment has been falling. This suggests to us some positive signs going forwards for Warsh’s productivity view … I SM headline strong + employment weak: also feels like productivity growth. In the end, all will depend on the job market and how quickly the AI effect will show up. Challenger job cuts due to AI picked up again in January, but we have yet to see this materialize in the weekly claims data, which is following the seasonal trend so far this year. With job market data in short supply due to the government shutdown, the focus is for now on other data. This week the manufacturing ISM is turning some heads. After lingering below 50 for more than two years, the January release marked a strong move higher, back into +50 territory”

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Diversion

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