Commercial realtor David Venance recently sold four rental apartment buildings in Victoria and they all had two things in common. They had zero vacancies and all the buyers were from Vancouver.
Victoria’s attractions for landlords fleeing the white-hot Metro Vancouver market include lower prices and higher capitalization rates, but the big draw is stability, said Venance, a multi-family specialist with Re/Max Bill Goold Realty of Vancouver.
“Victoria is a different animal,” Venanze said, explaining that investors are more likely to be landlords looking for positive cash flows, not land development or fast appreciation. “For a landlord, Victoria is more realistic.”
In Metro Vancouver, underlying land value and redevelopment potential for condominiums are significant reasons why the price per suite of old apartment buildings is now averages $240,000 and are north of $500,000 in some Vancouver neighbourhoods.
In comparison, Venanze recently sold a 22-unit apartment building on Quadra Street near Victoria’s downtown for $126,000 per suite, and others close to the core for around $135,000 per suite. Capitalization rates are in the 4.5% to 5% range, he noted, compared to around 3.5% in Vancouver.
Victoria is heating up, however, and Venanze said it is becoming difficult to find rental properties for sale.
In 2014, the sales volume for Greater Victoria apartment buildings hit a record of $127 million, up from $23 million a year earlier and more than double the 10-year average of $63 million, according to a report from Colliers International.
The Greater Victoria rental vacancy rate has plunged to 1.5%, the lowest level in four years, according to Canada Mortgage and Housing Corp. The average rent for a two-bedroom apartment is now $1,095, up 2.5% from a year ago and the second highest in B.C.
