“Aggressive Private Investors” changing Commercial Real Estate as Land Values soar…

iocolandsPrivate land investors, many from offshore, are sidelining new residential developments and skewing expected returns on commercial real estate, analysts warn.

 Private Investors and Developers are duking it out in Commercial Real Estate. Its now a measure of who has deeper pockets. Who are these Private Investors?….. Stay tuned.

Earlier this year Ioco Lands was sold to an offshore private investor, now identified as Novice Developer BCG (Brilliant Circle Group), a China based company.  Approximately 232 Acres was sold… 150 acres in Anmore and the rest in Port Moody. The sale included half of the Ioco Heritage Conservation Area to BCG.

Also , In downtown Vancouver during 2015’s first half, five residential land purchases totalled more than $50 million, compared with just one sale worth $2.1 million in the same period last year, according to the latest Metro VancouverLandShare report from Colliers International.

For example……Among downtown transactionsthis year was A private Investor who purchased 1065 Harwood and 1332 Thurlow St. – 17,293 sq.ft in total for $24million.

Followed by Amacon Development Corp.’s $21.7 million and $10.8 million purchase of 158 16,335 a sq ft site and 188 Robson – a 6,403 -sq.ft site – over half of an acre.

Along Cambie and other Vancouver transit corridors, residential land prices are also topping $20 million per acre.

Developers are forced to pay such high prices because of a new breed of “aggressive private investor,” said Kirk Kuester, executive managing director of Colliers’ Vancouver office.

“These investors, and they are not all from offshore, are willing to buy land and hold it, sometimes for years.”

This compares with residential developers who often aim for a 24-to-36-month window to redevelop and sell a multi-family project site, he said.

Kuester added that developers capable of outbidding the private investors, who account for roughly 90% of all residential land deals, must then factor inflated prices into the finished product.

The LandShare report showed that typical land costs on Vancouver’s west side now amount to $200 to $300 per buildable square foot for a concrete condominium tower and a record high of $275 per buildable square foot for a low-rise wood-frame apartment. Construction, finishing, financing, marketing, civic development fees and developer profit would then be added to the new home’s final cost.

Keuster adds that “The rise of land prices will slow only when buyers balk at paying more for what already is the most expensive housing in the country”.

The same scenario is playing out in the Lower mainland with a Private investor topping out the purchase of 1026 Brunette ,162,653 sq. ft site at $14.38million.

Bosa Properties coming in at a distant second with a 46,783 sq. ft purchase on Emerson St for $8.7million