Scarborough Leads Toronto Suburbs in Rental Yield for Property Investors

Scarborough has pulled ahead as the hottest turb for rental yields in Toronto, offering investors an average gross yield of 5.2%-the highest in the GTA, according to new figures from Urbanation released June 30. While downtown’s cachet still commands sky-high prices per square foot, it’s the east-end district, traditionally overlooked by investors, that now turns heads with its sharp return on rental property investments.

Rental yields have taken on new importance for buyers squeezed by stricter mortgage stress tests and the Bank of Canada’s policy rate, which, even after the June cut, sits well above pandemic lows. With Toronto’s average sale price climbing to $1.1 million and most midtown condos hovering closer to $800,000, investors are hunting suburbs where rising rents can cover more of their carrying costs-Scarborough is delivering.

Rising Tide in the East

Neighbourhoods along the Eglinton East corridor and near Scarborough Town Centre are seeing inflows of new residents, many of whom set down roots in newly built towers clustered around McCowan Road and Progress Avenue. The Toronto Community Housing revitalization along Lawrence Avenue East and Centennial College’s growing international student population add steady fuel to rental demand. Local realtors say the area’s condo prices, typically 10-20% lower than citywide averages, give investors a rare combination of affordable entry and robust tenant markets.

Urbanation’s Q2 data shows the average two-bedroom condo in Scarborough renting for $2,975 a month, with buy-in costs still accessible-newer units sell between $570,000 and $670,000 around Ellesmere Road. By contrast, similar space in Yonge & Eglinton or Liberty Village rents for a modest $250 per month more, but with condo prices commanding a minimum $800,000. Redfin data suggests Scarborough’s year-over-year rent increases-8.4% as of June-outpace those in Leslieville, North York Centre and even parts of Etobicoke, as newcomers prioritize value and transit links.

Where to Watch-and What’s Next

Scarborough’s status as a top-yielding suburb has drawn in not just small landlords, but institutional investors as well. Dream Unlimited’s planned mid-rise development near Kennedy and Eglinton, for example, is set to bring over 300 new rental units to market in 2027, betting demand will persist. For individual investors, property managers at Local Real Estate Group advise looking along the new Scarborough subway extension route, especially near Lawrence East and Midland stations, where infrastructure is primed to push up both rents and resale values over the next four years.

Still, rising attention brings risks of overheating. Prospective buyers should factor in potential rent control policy changes and competition from deep-pocketed REITs. With multiple Scarborough developments scheduled for completion by late 2026, supply should keep yields attractive but flatten “super-heated” rent increases. For now, investors willing to dig into Scarborough’s block-by-block data stand to gain an edge as Toronto’s east end steps into the spotlight.