Last week, in the first of our new columns for residential speculators and buy-and-hold investors, I shone the spotlight on the scorching market of Mount Pleasant. In the second edition, I want to consider a more under-the-radar area that could have just as much potential as a gold mine for real estate investors – if not more.
New Westminster may not be as achingly hip as Mount Pleasant right now, and it may have had its detractors in the past, but times they are a changin’ – especially in the fast-paced world of real estate. Especially because this small, riverfront city does offer many of the cool, Main Street-style amenities that young buyers and renters look for – independent stores, funky bars, street food festivals and so on. It is also a city that is underpinned by three huge employers – Translink, Royal Columbian Hospital and the Port of Vancouver – with major infrastructure projects in the pipe and a massive 400,000-square-foot office building proposed that could expand employment much further.
More than anything else, though, it is New Westminster’s happy location on the SkyTrain line running directly into downtown Vancouver that should inspire investors. Any location within an easy 25-minute commute to downtown Vancouver is extremely attractive to both home buyers and renters.
Combine all the above with average attached home prices at 30 per cent lower than Mount Pleasant’s, and it’s clear that New Westminster is an area that is still relatively underpriced and on the up. Hardly anywhere north of the Fraser and on the SkyTrain line can you buy an entry-level, 700-square-foot condo for $360,000, as a quick search on REW.ca shows.
And this is itself a much higher price than New Westminster has previously seen. Investors who got in a couple of years ago will have enjoyed excellent returns, with median sale prices for all attached units combined up 54 per cent over the past two years.
The city’s rental vacancy rates are even lower than Vancouver’s super-tight 0.7 per cent, with New West standing at 0.5 per cent for one-bed units, 0.1 per cent for two bedrooms and pretty much no vacancies to speak of for family-sized rental units. That’s just 0.4 per cent overall – a buy-and-hold investor’s dream.
That said, average rents are lower than in Vancouver proper, with a one-bedroom units currently on Craigslist going for around $1,300. If you bought that $360K one-bed unit, you’d need around $140K, or 38 per cent, as a down payment for the unit to cash flow (after strata fees and property tax). But you could expect to see a high ROI on that $140K within a couple of years – or just hold onto the property as New Westminster becomes ever more gobbled up by Vancouver’s ripple effect.
Pace of development
The pace of development in the area is an indicator of the development industry’s faith in New Westminster as a future place to be. Wesgroup has ploughed a huge amount of money into its masterplanned Brewery District community, and Aragon has done (and is continuing to do) the same in its Port Royal community in Queensborough on Lulu Island, which is slated to be connected by footbridge to the New Westminster waterfront.
The City of New Westminster has been proactive in ensuring that all household sizes are catered to, which adds to the city’s appeal for young buyers and families. City council mandated a minimum of 10 per cent three-bedroom units in all new developments – without which onerous requirement, many more developers might be carving themselves out a piece of the New West pie. At the other end of the scale, units as small as 350 square feet are also permitted.
With a population of just over 70,000 residents living across nearly 16 square kilometres, New West also has bags of room for much higher density, creating ideal conditions for further growth. The population is also growing faster (around 7.6 per cent a year, according to 2016 Census data) than then national average growth rate of five per cent. New Westminster also has a younger-than-average population, and the City predicts that while other regional populations age, New West will level off in average age or even decrease, as more young people and families move in.
As Vancouver proper gets increasingly expensive for both first-time home buyers and renters, what is considered a “central” area will ripple out exponentially. New Westminster, once our province’s capital city, will likely become ever more desirable by those seeking affordable condos to buy or rent – and both rents and real estate prices will inevitably rise accordingly.
With its hub-like central location between Vancouver and the burgeoning Fraser Valley, fantastic connections both to downtown and rapidly expanding Surrey, and idyllic waterfront lifestyle, New Westminster is a no-brainer for savvy real estate investors.