Multi-family buildings have remained in high demand and short supply in Metro Vancouver over the past six months, as low-cost financing allowed mostly private buyers to reach for the few assets that became available, according to Avison Young.
In its Winter/Spring 2012 British Columbia Multi-Family Investment Report, released today, Avison Young noted that 2011 multi-family sales in B.C. totalled $377 million – a 43% increase over 2010 ($264 million) – with the number of transactions increasing to 35 from 20.
“We continue to witness strong demand for multi-family assets throughout the Lower Mainland and on Vancouver Island,” said Avison Young principal Rob Greer.
“While supply remains a concern, cap rates continue to compress to historically low levels as purchasers take advantage of low-cost debt and CMHC-insured mortgages hit as low as 2.3% for five-year money.”
According to the twice-yearly report, there were just 15 transactions worth $139 million in 2011’s second half – a sharp decline from the 20 transactions valued at approximately $238 million in the first half.
“Institutional buyers remain actively engaged with the market, but investment-grade assets have not been available. When buildings do come to market, private buyers have typically been more aggressive on pricing,” added Greer.
“An overall lack of significant multi-family product in the second half of 2011 subsequently did not provide institutional buyers with the justification to put forward stronger bids.”
More than half of the Metro Vancouver transactions during the last six months of 2011 occurred in Vancouver, with Burnaby, New Westminster, Surrey and North Vancouver recording lower investment activity.
