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Residential land still seeing eye-popping prices

Even as B.C. home prices decline, Metro Vancouver and Vancouver Island developers appear willing to pay millions of dollars per acre for residential assemblies
A 1.2-acre residential development site (the ‘Cut’) in East Vancouver sold In October for $23.8 million. | Colliers

While benchmark prices for homes in British Columbia have been declining since a peak level this spring, developers still appear willing to pay eye-popping prices for residential land, based on recent transactions.

The Homebuilders Association of Vancouver released a report January 31, 2022, that estimated that land values account for 38.1 per cent of the average cost of a new Metro Vancouver detached house, which sold at the time for $1.75 million.

Land prices have continued to increase since then.

According to Altus Group, residential land was the primary investment in Metro Vancouver during the first half of 2022 with $2.94 billion in dollar volume, representing 52 per cent of all land transactions. A first-half example includes a 0.6-acre site in the Metrotown area of Burnaby, zoned for high-density residential, that sold June 22 for $21.8 million.

Here are some recent examples culled from done deals posted in Western Investor in the third quarter of this year, which include Metro Vancouver and Vancouver Island transactions:

• A 1.23-acre land assembly in East Vancouver near Trout Lake sold in mid-October for $23.8 million, equating to close to $20 million per acre. The land is zoned for a townhouse development at a floor space ratio (FSR) 1.45. This means the 53,664 square-foot site could accommodate total residential space of 77,812 square feet, requiring more than $305 per square foot in the final townhouse price before construction even starts.

• In Surrey, less than acre (0.97-acre) in the Fleetwood area and close to a planned station for the Surrey-Langley Skytrain extension sold October 12 for $6.5 million.

• A 1.05-acre residential infill site in Langley’s Willoughby area, zoned for compact detached homes, sold October 6 for $2.95 million. A one-acre residential site in the same neighbourhood transacted September 20 for $2.9 million.

• In Greater Victoria, a 1.4-acre residential development site ihn Colwood sold September 23 for $2 million over its assessed value at $2.85 million. In Nanaimo, a 0.4-acre lot sold September 29 for $1.69 million, equal to around $4 million per acre.

The current prices being paid for residential land suggest that both new strata and rental prices may need to increase in the future as developers attempt to capture high land values.