Land deals ‘firing on all cylinders’

Greater Vancouver’s residential land market notched its second-best quarter on record in terms of over-all dollar value of transactions to mark the beginning of 2014, according to a report by RealNet Canada.

Deals for residential land grew in over-all dollar value for the fourth consecutive quarter. The first quarter of this year showed 107 residential land deals worth $528 million, up nine per cent from the fourth quarter of last year and up 111 per cent from the same quarter last year, according to the report.

Most of the residential land deals, which included transactions worth between $1 million and $84 million, took place in Vancouver, with much of the action located downtown and near transit and SkyTrain/Canada Line corridors.

“The majority, on a transaction basis, is happening along the SkyTrain (and Canada Line) corridors and then the remaining (deals) seem to be in-fill development projects,” said Paul Richter, director of research at RealNet Canada

“A few years ago there was a run on land out in the Fraser Valley and now it seems like developers, at least in the last six months, have really been concentrating on land acquisitions along the SkyTrain lines,” Richter said, noting that much of the land continues to be re-developed into condo projects or mixed-use buildings. “That quarter-over-quarter growth (in residential land) is not like in any other asset class.”

The RealNet report also tallied transactions around the region in other asset classes: offices, industrial buildings, apartment buildings, retail, hotels and other types of non-residential land.

A total of 329 transactions worth $1.5 billion across all asset classes were registered in the first-quarter, according the report. That figure was up about one per cent from the previous quarter, with residential land being the most active sector, at 36 per cent of activity.

“The last six months have been the best six months ever recorded in terms of over-all investment in the Greater Vancouver commercial real estate market,” Richter wrote in the report. “Deals in excess of $20 million across all asset classes, and a higher volume of transactions throughout the lower thresholds has created a growing and well balanced market.”

He said the residential land market has been remarkably resilient, with almost no noticeable “corrections or hiccups” since the dramatic market downturn through late 2008 and early 2009 that saw land sales dry up around the Lower Mainland for several consecutive quarters.

The demand for land assets to be used for condo developments has been very steady, and has powered several of the other asset classes including retail and office space, which tend to get folded into large mixed-use developments along the transit corridors, Richter said. “The residential land market has a trickle-down effect on asset classes like retail and even industrial.”

Deals in the non-residential land market (industrial, commercial, investment) also surged ahead in the first quarter of this year, exceeding the $300 million mark for only the fifth quarter in the last nine years. There were 82 ICI land transactions worth $307 million — that’s a 53-per-cent increase from Q4 2013 and the second straight quarter-over-quarter increase. (ICI land includes various types of land such as agricultural, institutional or recreational).

Together, land deals attributed for 56 per cent of all real estate transactions across Greater Vancouver in the first quarter.

The Vancouver Sun