Real estate investment trusts (REITs) that deal in rental apartments are buying up property on Vancouver Island. Recently, Northern Property REIT, which normally focuses on northern B.C. and Alberta, bought two Nanaimo rental buildings.
Last year, investors bought up $38.4 million worth of apartment buildings in the mid-Island up from $19.4 million a year earlier - with $13.3 million of that in Nanaimo, according to a survey by Colliers International
The average mid-Island rental building is selling for around $84,000 per apartment, but prices are in the $60,000 range in Lake Cowichan and Ladysmith and as low as $25,000 further north in Port Hardy. The rental vacancy rate is 6.3 per cent on the mid-Island, partly because construction of new rental product virtually stopped after 2008. These numbers combine with low-cost CMHC-insured financing to mean the mid-Island remains a “safe haven” for investors, Colliers said.
Capitalization rates on multi-family buildings are in the 6 per cent range, which is about twice as high as in most of Metro Vancouver.
Vancouver-based Molnar Group is building 121 units of new rentals this year just north of downtown Nanaimo and there is rental competition from a large number of investor-owned condominiums, Colliers cautions.
