Record $3 billion in apartment building sales in Vancouver and Victoria in 2021

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The combined value of 2021’s multi-family apartment building sales within Metro Vancouver and Greater Victoria reached a record $3 billion.

This is nearly triple each of the entire annual totals of 2019 and 2020, which saw $1.14 billion and $1.12 billion, respectively.

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According to CBRE’s new annual report on multi-family sales covering both regions, there were 185 deals in 2021 — up from 84 in 2020, and 96 in 2019.

Of the total, $2.22 billion were from the 138 building sales recorded within Metro Vancouver, with the downtown Vancouver peninsula leading the way with 24 building sales for a combined value of $768 million — about $531,000 per unit on average.

This is followed by 52 building sales in the Vancouver Westside worth $622 million, 20 building sales in the Vancouver Eastside worth $204 million, 12 building sales on the North Shore worth $396 million, and five building sales in Burnaby worth $47 million.

One of the largest deals of the year was made by CBRE, when it sold Hollyburn Properties’ Legacy Apartment Portfolio — 614 units across 15 properties — for $293 million in January 2021. The portfolio was sold to Ontario-based InterRent Real Estate Investment Trust and Crestpoint Real Estate Investments.

The pandemic slowed down building sales in the third quarter of 2020, but activity picked up in the second half of 2020 and continued into 2021.

Vacancy rates increased and rents softened initially in the pandemic, of course. But with recovery well underway, the easing of restrictions, and the return of immigration and international students, all accompanied with a structural shortage in rental housing and unaffordable ownership housing, the vacancy rates and rents have returned to pre-pandemic levels.

This resurgence is fuelling interest by developers and real estate investment trusts to invest in multi-family apartment buildings as an asset.

CBRE anticipates market conditions will remain strong in 2022 and beyond, as a result of Canada’s immigration target of allowing 1.2 million new residents over three years, and lagging rental housing construction.

Canadian population growth is now overwhelmingly driven by immigration; immigration accounted for 34.2% of the country’s population in 1972, increasing to 84% in 2019. Metro Vancouver typically sees about 35,000 people move into the region annually.

Changing government policies on rental housing will also prompt property owners to recalculate their pro forma and returns, and reconsider their assets.

“Supply can be expected to continue to come to market as more private landlords who have owned for decades weigh the challenges imposed on them under provincial rent control policies and potential changes to capital gains taxes against the current demand and record pricing being achieved in the marketplace,” reads the report.

“Pricing can be expected to hold as market fundamentals remain strong and interest rates remain low.”

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