Demand for these assets surpassed all expectations and previous records
Unprecedented demand for British Columbia’s multifamily assets in the first six months of 2021 led to a record high of 78 sales valued at more than $1.9 billion during that period, according to Avison Young.
The first-half volume far exceeded the previous annual record volume of 85 sales totalling $1.51 billion, set in 2018. The previous multifamily sales record for a six-month period was 54 sales valued at $1.04 billion during the second half of 2015, Avison Young said.
“There is no historical comparison for the deal and dollar volume generated by investors’ appetite for BC multifamily assets in the first half of 2021,” Avison Young said. “Sales of multi-family assets in just the first half of 2021 almost surpassed the entire annual BC investment total for all industrial, retail, and office assets sold in 2014 ($1.95 billion).”
Read more: What asset class continues to prop up the commercial segment?
Institutional purchasers accounted for a large share of transactions in the first half of this year, representing almost 15% of all buyers of BC multifamily properties. REITs had a significant presence as well, comprising nearly 13% of buyers.
“Transactional activity from institutional investors, private buyers, and REITs alike is being largely motivated by near record-low capital costs, particularly when it comes to acquiring assets of scale as well as anticipated rental rate appreciation in the coming years related to rising inflationary pressures,” Avison Young said. “With Canadian inflation hitting 4.4% in September (the highest since 2003) due to higher fuel and housing costs, rental rates are expected to rise in both existing multifamily buildings and new purpose-built rental buildings. Both trends are contributing to a greater consolidation of ownership among institutions and REITs.”
