Despite measures meant to cool the housing market, developers are continuing to bank on the lucrative residential land sector, which experienced record levels of investment in 2016. The figures come from Altus Group's Vancouver Flash Report, which provides a data-based snapshot of the real estate market. The strong residential investment activity bolstered the total investment property sales volume for the year in the Vancouver Market Area (VMA), reaching $12.4 billion and easily overtaking the previous record set just one year prior.
The best-ever level of investment activity in the VMA was also supported by $2.3 billion registered to the ICI land sector, a 43 percent increase over the previous high in 2015. Another $1.2 billion was pumped into the industrial sector to break the billion dollar threshold for the first time.
Property sales transactions have continued strong into 2017, with the first six months closely aligning with the first half performance of 2016. Though the number of deals had decreased, the average value of the deals had increased. Combined investment volumes for the residential and ICI land sectors were down by nearly $1 billion for the first half of 2017, but a robust performance in the office and retail markets picked up the slack. Three major transactions buoyed these sectors with a combined value of over $614 million. BCIMC's purchase of the Oakridge Centre, and the sale of Burnaby's Metrotower I & II and Vancouver's Waterfront Centre and Granville Square were the standout deals.
About 1.1 million square feet of office space was under construction by the end of Q3 2017, roughly half of which is centred in the downtown area where the vacancy rate sits below seven percent. Approximately 3.3 million square feet of net new office space was added in 2014 and 2015 that initially resulted in higher vacancy rates that have since dipped as demand rebounded.
New homes sales in the VMA totalled just under 24,900 units in 2016, a 42 percent jump from 2015. Not surprisingly, the top municipality for condominium apartment sales was Burnaby, followed by the City of Vancouver. While sales levels slowed in the first half of 2017, the numbers are still higher than those recorded at the same time in 2015. Three dozen new condominium apartment projects opened in 2017's first two quarters bringing nearly 4,600 units to market. A consistent lack of supply — less than 1,800 units in total were in available inventory at mid-year — has contributed to a rise in prices of about 15 percent from a year earlier. The average price per square foot has now broken the $800 mark. Approximately 12,000 condominium apartment units will come online in 2017 and 2018.