B.C. multi-family investment market begins to stabilize

British Columbia's multi-family investment market is starting to stabilize, says an Avison Young report released today.
"The market stumbed through the latter part of 2008 and the beginning of 2009 with barely enough sales to indicate new realistic market pricing," says Avison Young principal Rob Greer. "Now, that seems to have completely changed. The market is currently very active with a sense of renewed confidence on the part of investors."
Avison Young's Q2 2009 BC Multi-Family Investment Report shows a total of 14 multi-family-property transactions were completed in the second quarter of this year, down slightly from 17 in the first quarter. However, total dollar volume increased 51 per cent to $89.8 million from $59.3 million during the same period.
"In the second quarter of 2009, we definitely saw the market pick up," says Avison Young multi-family investment advisor Michael Brodie. "We saw quite a flurry of activity towards the end of the second quarter. The doom and gloom prevalent at the end of 2008 and in the early part of 2009 has disappeared."
According to the report, buyers have pressured vendors and their brokers to market properties based on "actual income and opportunities for real returns." Purchasers, while drawn to attractive financing available from Canadian Mortgage and Housing Corporation (CMHC) and the consistency of multi-family returns, have returned to fundamentals that emphasize cash flow.
"Individual private investors were the most active in the second quarter of 2009," says Avison Young sales associate Matt Saunders. "Most vendors continue to be private investors who are either retiring or looking to reposition their finances."
As long as specific yield targets are met, the market will continue to see a high level of activity for the rest of this year, says Greer. But landlords have to be careful not to be too aggressive with rental increases, or else suites could sit vacant for several months.
Overall, he expects the market to witness increased sales activity in both dollar volume and number of transactions in the latter half of 2009 as capitalization rates stabilize and interest rates remain at historical lows.

The full report can be viewed at http://www.avisonyoung.com/.