Why is Vancouver a Good Real Estate Investment?
The city’s population is steadily growing. In 2010 there were 600,000 in the city and 2.4M in Greater Vancouver and 4.6M in all of BC. The density factor is about 5,249 pr sq kilometer and is on Pacific Standard Time, so is the closest geographical Province to Asia.
Vancouver has a shortage of land It is hemmed in by the mountains on the north, the ocean on the west and only 25 miles to the US border on the south. The city can only grow east into the Fraser Valley or into the sky! It is growing into a desirable international city, particularly with Asians, many of whom use it as a bedroom community. In 2014 Vancouver was voted the most liveable city in North America.
Greater Vancouver has an annual net migration of about 40,000-60,000. As the city continues to grow there will always be a certain number of people who are urban livers and wish to live in the Downtown peninsula (Downtown, Coal Harbour, Yaletown and the West End) or in a neighourhood that is close by (Kitsilano, False Creek or Mount Pleasant). The availabilty of development lots is diminishing , so the only option is for the City of Vancouver to rezone current lots and permit increased density. This option is not popular with many local residents.
Real Estate prices have become unhinged from local incomes due to international investment. European money is now flowing into the city. In addition , first time buyers are receiving help from the Bank of Mum and local investors are moving their money into real estate because the vacancy rate is below 1% and rents are on the rise. Parents who live in the suburbs and plan to send their kids to UBC are buying a condo with an eye to the future. Baby Boomers who live in the suburbs are buying a condo pied-a-terre which they rent furnished and use it themselves when they visit the city to enjoy what it offers. Some Baby Boomers are selling their house in the suburbs and relocating to a condo in Vancouver.
Vancouver checks off all the boxes that give a city long term resiliency when considering real estate investments – environmental sustainability, economic prosperity and community liveability. The aforementioned includes social and environmental vulnerability and adaptive capacity, as stated by Urban Land Institute’s Patrick Phillips.
Buyers who are real estate investors, usually purchase condos and rent them out furnished or unfurnished. The rental vacancy rate in Vancouver is currently below 1% and there are many applicants competing for available suites. Since the 1990s real estate developers have been tearing down old rental buildings and constructing condo buildings, so the rental stock has been shortened and there are very few buildings being built for rentals. Rising real estate prices have resulted in rising rents, which is attractive to investors. As real estate prices escalate, more young people will have no option but to rent if they wish the urban lifestyle.
In addition, UBC has become a big income generator for the City of Vancouver, attracting foreign students to the University, as well as all the other businesses operating at UBC – MRI research, the hospital.
Laurence D. Fink, Head of the world’s biggest asset manager says “purchasing gold has lost its lustre, there are now better mechanisms. The two greatest stores of wealth internationally today is contemporary art….. and I don’t mean that as a joke, I mean that as a serious asset class,” said Fink. “And two, the other store of wealth today is apartments in Manhattan, apartments in Vancouver, in London.” The UK’s Kinght Frank ranked Vancouver #1 for luxury real estate on the Prime International Investment Index.
Although there has been a lot of buzz in the media about Mainland Chinese buying up Vancouver real estate – houses, condos and commercial – and many economists have proposed a tax for those buyers who do not occupy the property, resulting in many dark towers, the BC Government has decided not to wade into this discussion, primarily because they like the taxes generated from offshore investors. The low Canadian Dollar is now also attracting investors from Europe and the USA.
The world’s population will continue to grow as we move forward and people in large cities will seek refuge in smaller cities with cleaner air, less population and a better quality of life – our waterfront city meets all these criteria. In addition, Vancouver was just voted #5 for the best qualify of life and English Bay is ranked in the top 50 beaches in the world. Stanley Park was rated the top park in the entire world in 2015.
The future price of Vancouver condominiums can be expected to increase because of escalating prices being paid for land, according to a LandShare survey compiled by Colliers International in Vancouver. The study found that land values have driven up the price-per-buildable square foot of new condo projects.
Vancouver property listings are at a ten year low, having peaked after 2010 Olympics and the population is considerably higher population than ten years ago. There are five to twelve offers on most properties. Buyers feel that if they don’t get into the market now they will be forever priced out of it.
The Vancouver real estate forecast is that we will be talking about high house prices this year, next year and the one after that. I look at the city as evolving into a mini-London, a safe haven for international money to invest in our land bank. Vancouver has always been a desirable place to live and it will continue to be, albeit more expensive.
Vancouver Neighbourhood Specialist Maggie Chandler
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- Author Maggie Chandler 1648 W. 6th Ave., Vancouver, BC V6J 1R3
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