Numbers of residential apartments sold in B.C wiped out its records during the first half of 2021

Monday, November 1st, 2021

Sales of apartment buildings in B.C. break records in first half of 2021

Joanne Lee-Young
The Vancouver Sun

Private buyers and financial firms are motivated to buy because borrowing costs are very low and rents are expected to increase sharply in the next five to 10 years.

The Martello Tower, right, at 1011 Marine Drive. Photo by NICK PROCAYLO /PNG
The number and dollar value of residential apartment buildings sold in B.C. during the first half of 2021 wiped out records, according to a recent Avison Young investment report.
“It caught us a little 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 definitely underestimated the amount of capital that was going to flow into our market here in B.C.”
In the first six months of 2021, there were 78 sales valued at more than $1.9 billion. The previous record set in 2018 was 85 sales valued at $1.51 billion, but for the entire year. The last half-year record was in 2015 when there were 54 sales valued at $1.04 billion.
The sales of multi-family properties in the first half of 2021 almost exceeded the entire annual B.C. investment total for all industrial, retail and office assets sold in 2014, which was $1.95 billion.
Greer said private buyers, but also financial firms such as institutional investors and real estate investment trusts (or REITs), are motivated by very low borrowing costs and the prospect of sharp rental growth over the next five to 10 years.
“In this inflationary environment that we’re currently in, we are anticipating rents to start moving up very quickly.”
Buyers, he said, are also assessing the risk compared to buying other assets.
“Investing in rental apartments in B.C. 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 share sales. And two Ontario-based REITs, Crestpoint Real Estate Investments and InterRent REIT, bought 15 rental buildings in Vancouver for $292.5 million.
Avison said it counted these three larger 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 deal involved properties in the $5 million to $25 million range, but there were two larger ones in Vancouver’s West End: Martello Tower, which sold for $135 million, and Park West, which sold for $40.8 million. Outside of Vancouver, Rainbow Plaza in Whistler sold for $41 million and Riverport Flats in Richmond sold for $45.5 million, according to the Avison report.
Greer said he expects the trend to continue, especially in a lot of markets that “maybe were previously ignored such as Kelowna and Victoria and even sub-markets like Langford.”
“Those institutional groups that really focused on Vancouver proper are now looking at tertiary markets as well.”
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