Toronto, January 13, 2026, 04:20 (EST)
- Bloomberg reported that roughly C$30 billion ($21.7 billion) is currently frozen as Canadian private real estate funds limit withdrawals.
- Economists and advisers caution the ripple effects might disrupt construction financing, right when Ottawa is aiming to ramp up homebuilding.
- Fund managers say limits aim to prevent forced asset sales, though the timelines for reopening frequently remain uncertain.
Private real estate funds with roughly C$30 billion ($21.7 billion) tied up by Canadians have halted withdrawals, trapping investors amid the housing slump, Bloomberg reported Monday. Vancouver property manager Andre El-Baba called it “terrible” after Romspen blocked redemptions. Adviser Jamie Grundman noted, “This stuff spreads like wildfire,” while economist Diana Petramala warned, “It drags on for years.” Wealth manager Darren Sissons added, “Real estate is not the holy grail,” and professor Jim Clayton described the situation as a “house of cards.” https://www.fa-mag.com/news/canadians-are-… fa-mag.com
The lockups hit more than just frustrated clients—they’re a key source of funding for buildings, development loans, and projects linked to Canada’s prolonged housing boom. Now that investors are trapped, advisers warn many will hesitate before putting new money into anything that can’t be quickly offloaded.
Prime Minister Mark Carney faces a tricky moment as his government pushes housing supply to the forefront of its economic agenda, urging builders and investors to step up. When unveiling Build Canada Homes last year, Carney promised the government is “relentlessly focused on bringing down housing costs.” https://www.pm.gc.ca/en/news/news-releases… Canada PM
“Gating” refers to restricting redemptions—investor withdrawals—to prevent selling illiquid assets in a shaky market. While it shields remaining investors from a fire sale, it often unsettles clients who were promised they could exit anytime.
The funds expanded rapidly over two decades as Canadian home prices surged and real estate seemed like a sure bet. Numerous products promised steady income and easy access, despite the fact that their core assets — properties and real estate loans — often require months to sell or refinance.
The gap becomes clear quickly as rates climb and prices drop. Bloomberg reports that nearly 40% of about C$80 billion locked in these private real estate funds now faces some kind of restriction. Companies frequently refuse to specify when investors can expect normal access again.
Managers have varied their approaches: some are slowing withdrawals, others slashing distributions, and a few are doing both. Bloomberg highlighted several firms that have either stopped redemptions completely or started rationing them as demand surged and asset sales lagged.
The slump has taken a toll on sentiment and activity across the broader property market. Bloomberg referenced data from the Canadian Real Estate Association, which shows prices still sit far below their peak. Meanwhile, Canada Mortgage and Housing Corp is keeping an eye on the gating trend but hasn’t clarified what impact it might have on future construction.
In August 2025, Trez Capital moved to temporarily suspend redemptions on five open-ended funds, citing “elevated unitholder redemption requests” combined with funding demands and debt restructuring efforts. The firm framed the action as necessary under the circumstances. https://www.trezcapital.com/newsreleases/t… TrezCapital
Some have opted to ration outflows instead of shutting them off entirely. Last year, Centurion Apartment REIT told unitholders it introduced a managed redemption program, capping redemptions at C$20 million per month on a pro-rata basis after a surge in requests overwhelmed its usual processing capacity.
But there’s no easy out. Gates might lift if transaction markets thaw and funds manage to raise cash via sales or refinancing, though the danger is a stampede once investors sense trouble. If prices drop more or borrowing costs remain steep, managers could extend restrictions beyond what investors anticipated — and the damage to trust could persist even after the limits are eased.
Canada isn’t the only one relearning that “daily liquidity” clashes with illiquid real estate. In 2022, Blackstone’s unlisted real estate income trust had to limit withdrawals after a wave of redemption requests. This episode underscores how quickly gating can kick in once investors test the exit door. https://www.reuters.com/business/finance/b…
