Developer Westbank paid $32.4 million, or more than $15 million per acre, for the 2.2-acre site of its new Vancouver House residential tower. But that is not the most expensive residential land sale in Metro Vancouver thus far this year.
Top-dollar prize in that category goes to the $83.5 million paid for a site measuring less than an acre on Alberni Street in Vancouver’s West End.
“[Residential] land remains the most sought-after commercial real estate investment in British Columbia,” said an Avison Young mid-year report on commercial real estate sales.
But one real estate commentator believes the white-hot demand for residential reveals an economic fault line, because much more is being spent building condominiums than on places for people to work or learn.
Residential land is clearly leading B.C.’s investment curve.
In 2014’s first half, the top five residential land sales across Metro Vancouver, at a total of $255.6 million, were worth more than all of B.C.’s industrial property sales, at $163 million, and accounted for 30% of the total commercial property transactions in the province.
Other notable sales of residential land, all aimed at high-density development, include $69 million paid for 4.91 acres on No. 3 Road in Richmond and the $20.7 million sale of 1.1 acres in Burnaby’s Metrotown area.
The higher land values could signal rising prices for future multi-family housing units in Metro Vancouver.
The land costs for Vancouver House, for example, translate into $83,000 for each of the 388 condominiums in the twisting tower that will rise at the north end of the Granville Street Bridge.
Real estate buyers pay much less for non-residential land, the Avison Young report reveals. Metro Vancouver industrial land, for example, sold for between $1 million and $2 million per acre this year, while the biggest sale of commercially zoned land pencils out to $1.45 million per acre for a 40-acre site near Burnaby’s Brentwood SkyTrain station.
“There is something out of whack here,” said real estate consultant Ozzie Jurock, who hosted a Real Estate Outlook 2015 conference in Vancouver on September 13. Jurock noted that in 2014’s first seven months, Metro Vancouver residential permits reached $2.9 billion compared with $1.2 billion for total non-residential construction. Across the province, home building permit values are outstripping non-residential permits by a four-to-one ratio.
Said Jurock: “Residential construction this far ahead of non-residential reflects a weak pattern of business investment that could stunt economic growth.”