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Business in Vancouver
weekly business newspaper
Vancouver, BC
April 18, 2013
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Pricey multi-family buildings endure ultra-low
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Multi-family residential property
By Glen Korstrom
Thu Apr 18, 2013 11:03am PST
Multi-family residential property prices in B.C. strengthened
in 2012 as rental returns for owners reached 20-year lows,
according to Avison Young’s spring 2013 B.C. multi-family
investment report, which was released April 17.
Returns for owners are known as the capitalization (cap) rate,
which is the ratio between a property’s net operating income
and its original price. For example, a $1 million property that
generates $100,000 annually after expenses would give the
owner a 10% cap rate.
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A dwindling supply of multi-family product in primary markets
pushed many purchasers – private investors, REITs and
institutional buyers – to secondary markets in search of acquisitions and yield, the report noted.
Owners of other real-estate classes told Business in Vancouver that they are diversifying to expose
themselves more to multi-family properties.
“Residential is very strong,” said Zack Bhatia, vice-president at Mayfair Properties Ltd. “You haven’t
seen cap rates this low in 20 years. You’re buying buildings now at sub-4% cap rates. That’s a very
low cap rate showing just how strong residential multifamily properties are right now.”
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Pricey multi-family buildings endure ultra-low capitalization rates | Real Estate and Development | Business in Vancouver
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