Thirty-seven per cent of Canadian multi-family investment activity has taken place in Vancouver so far this year, according to a new report.
Commercial real estate firm JLL’s multi-family outlook report places Canadian investment volume for the first half of 2017 at $2.7 billion. Vancouver assets account for $1 billion of the total volume.
“Vancouver is expected to surpass the investment volumes seen in 2016,” the report states. “Current momentum suggests that changes in mortgage rates will not affect most market deals.”
Investment in Vancouver has been driven by a combination of low vacancy rates, stabilizing capitalization rates and tight supply, according to JLL. Domestic private investors account for nearly all of purchasers, with 1.1 per cent of assets purchased by real estate investment trusts. Only 3.4 per cent of multi-family stock sold to international investors out of the U.S.
Canadian multi-family investment is on pace to match 2016’s $5.2 billion in value. However, not all markets are enjoying high activity.
In Alberta, lack of stock and the oil recession has caused trepidation among investors.
Calgary investment volumes are down considerably from last year, accounting for only two per cent of total investment activity during the first half of 2017. There have been 38 apartment transactions worth $92 million so far this year. Transaction numbers are up over 2016 – though price decreases on high-rise stock have negatively impacted investment values.
JLL notes that sellers seem reluctant to sell in current market conditions, which favours buyers.
In Edmonton, sales activity accounts for four per cent of total investment value. The number of transactions is down over 2016, though total investment dollars is up over the first half of 2016.
The $191-million Edgewater on Jasper sale bolster investment values, though the lack of similar high-rise complexes has kept activity modest.
