Owners of new apartment buildings across Canada are now smiling like Cheshire cats, with rental housing availability at its lowest point in 12 years, according to a new report from Cushman & Wakefield Ltd.
Company CEO Pierre Bergevin told reporters Wednesday that the availability of rental housing has been declining since 2007, but the lack of apartment construction has resulted in the biggest lull since 2000.
Cities such as Toronto, where condominiums have taken over as the property development of choice, haven’t had new apartment construction for at least 40 years, added Bergevin, and revealed that the vacancy rate of residential multifamily projects was less than 3 per cent in major urban markets.
Realtor Adam Brind agrees, saying, “Our vacancy rates are definitely at an all-time low.”
He adds that supply of purpose-built apartment buildings is dwindling, as developers move towards new condos and converting apartment buildings into condos.
“The reality is, there’s not much incentive nowadays for developers to build apartment buildings,” he says.
But do investors stand to make more money in the condo game than with REITS?
“Not necessarily,” says Brind. “I think that the reality is that it depends on the investment objectives. One of the pitfalls with apartments to bear in mind is that anything build before 1998 is subject to Landlord and Tenancies Act, any building after is not.
Essentially, landlords are governed by a lot more rules in buying an older apartment building. They have the rent rates capped, says Brind.
“One might be inclined to be something that’s a little newer just for that fact,” he tells CREW. “So from an investor standpoint, do I think there’s an opportunity to be had? Absolutely.”