Investment activity in multi-family real estate assets in British Columbia remained strong in the first half of 2018 but that could be set to change.
The latest analysis of the market by Avison Young shows that there were 42 transactions valued at $667 million. This meant a larger dollar volume ($652 million in 2017) than the same period of 2017 but from fewer deals (46 in 2017).
The first half of 2018 also surpassed the second half of 2017 in both dollar volume and number of deals ($624 million/43).
But AY isn’t forecasting a new record in 2018 for the $5m+ sector – that would need to beat 2015 when 80 properties valued at $1.41 billion traded hands.
Avison Young has identified several challenges to multi-family investments, notably affordability with rising prices and interest rates.
There is also uncertainty surrounding potential policy changes from new mayors and councils following municipal elections. This could lead to constraints on rezoning and developments unless they include significant below-market and social housing requirements, making some unviable for developers.
“All these factors will likely contribute to a slowing in multi-family investment activity in the second half of 2018 and first quarter of 2019, which will not only serve to establish stability or a new baseline in the market but provide acquisition opportunities for adept investors and developers as well,” said Avison Young Principal Robert Greer.
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