Landlords are paying record prices in a “relentless pursuit” of cash-flowing apartment buildings across Metro Vancouver, according to multi-family specialist Dave Goodman of HQ Commercial.
Total sales of rental apartment buildings surged 36 per cent in the first six months of this year, compared to the same period in 2013, with suburban markets seeing a 212 per cent increase in total apartment unit sales. In Vancouver, where the average price of an apartment rental suite increased 13 per cent to a record $302,179, sales of rental units fell 16 per cent but the dollar volume dropped by only 5 per cent, to $158 million.
“New buyers both offshore and local have been relentlessly pursuing older three-storey frame and high-rise buildings,” Goodman said.
Based on the first-half performance, Goodman forecasts that 125 apartment buildings will sell across the Metro region this year, representing a dollar volume of more than $800 million. “A breakout year indeed,” he said.
The average overall price-per-suite in suburban markets this year is $204,302, up a startling 22 per cent from a year earlier.
The suburban sales volume was boosted by the $140 million purchase of the 633-unit portfolio of Calgary-based Boardwalk Rental Communities by Toronto-based Realstar Group. Last month, Boardwalk, a real estate investment trust, sold three concrete rental towers, in Burnaby and Surrey.
Fueling the average price increase in Vancouver was the sale of aging apartment buildings in Kerrisdale and Kitsilano, where average prices reached nearly $414,000 per unit. In one deal, an older apartment complex near the University of BC sold for $1.2 million per suite.
Developers are snapping up rental and co-op apartment building sites that could be redeveloped, paying over $250-per-square-foot buildable in the Kerrisdale area, Goodman explained in his mid-year Goodman Report newsletter.
Two numbers are helping buoy the rental apartment market: long-term mortgage rates remain available from less than 3.5 per cent; and the rental vacancy rate across Metro Vancouver is at a low 1.7 per cent, according to Canada Mortgage and Housing Corp.
