Sales of apartment buildings in BC are breaking records in the first half of 2021

Private buyers and financial companies are motivated to buy because borrowing costs are very low and rents are expected to rise sharply over the next five to 10 years.

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The number and dollar value of residential properties sold in BC in the first half of 2021 erased records, according to a recent investment report from Avison Young.

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“It caught us a bit off-guard. I knew it was going to be a really strong year at the beginning of the year,” said Rob Greer, principal at Avison Young Commercial Real Estate. “But I certainly underestimated the amount of capital that would flow into our market here in BC “

In the first six months of 2021, there were 78 sales worth more than $ 1.9 billion. The previous record set in 2018 was 85 sales worth $ 1.51 billion, but for the full year. The last half-year record was in 2015, when there were 54 sales worth $ 1.04 billion.

The sale of multi-family properties in the first half of 2021 exceeded almost the entire total annual BC investment for all industrial, retail and office assets sold in 2014, which was $ 1.95 billion.

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Greer said private buyers, but also financial firms such as institutional investors and real estate mutual funds (or REITs), are motivated by very low borrowing costs and the prospect of strong rental growth over the next five to 10 years.

“In this inflationary environment that we are in at the moment, we expect rents to start rising very quickly.”

Buyers, he said, also assess the risk compared to buying other assets.

“Investing in rental apartments in BC is probably one of the lowest risk profiles of any asset class right now.”

Toronto-based Starlight Investments bought two separate portfolios of multi-family apartments, in Vancouver and West Vancouver, and Victoria and Esquimalt through stock sales. And two Ontario-based REITs, Crestpoint Real Estate Investments and InterRent REIT, bought 15 rental buildings in Vancouver for $ 292.5 million.

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Avison said it counted these three major portfolio purchases each as a single transaction, even though they involved clusters of buildings. There were 75 other sales in the first half of 2021, enough to exceed the total annual number of multi-family sales in both 2019 and 2020.

The typical trade involved properties in the $ 5-25 million range, but there were two larger ones in Vancouver’s West End: Martello Tower, which was sold for $ 135 million, and Park West, which was sold for $ 40.8 million. Outside of Vancouver, the Rainbow Plaza in Whistler sold for $ 41 million and the Riverport Flats in Richmond sold for $ 45.5 million, according to the Avison report.

Greer said he expects the trend to continue, especially in many markets that “may have been ignored in the past, such as Kelowna and Victoria and even sub-markets such as Langford.”

“The institutional groups that really focused on Vancouver itself are now also looking at tertiary markets.”

jlee-young@postmedia.com


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