With a mission to inform, empower, celebrate and advocate for British Columbia's current and aspiring business leaders, BCBusiness go behind the headlines and bring readers face to face with the key issues and people driving business in B.C.
Issue link: http://digital.canadawide.com/i/1484213
NOVEMBER/DECEMBER 2022 BCBUSINESS 31 SOURCE: STATISTICS CANADA entities are moving into the housing world. While the concept of making a profit by renting people places to live is hardly new, critics say that the power of pension funds, REITs—which harness the money of thou- sands of small investors—and investment companies has increased exponentially. T H E B . C . B U M P Canada hasn't seen quite the same onslaught of Godzilla-like corporate apart- ment-gobbling that the U.S. has. But it has seen some. In B.C., that's led to a wave of recent big buys. In the past few years, Star- light Investments has bought five concrete apartments, including the famous "pink palace" in West Vancouver, from the Lach- man family, along with eight buildings with 485 apartments in Victoria. Ottawa's InterRent REIT and Toronto's Crestpoint REIT bought 15 buildings for almost $300 million from the Hollyburn family empire, after founder Stephen Sander died in 2020. "Before, if you wanted to make money, you had to go in with some people and buy a building. Now, you can raise money in public markets," says Martine August, a planning professor at the University of Waterloo who specializes in studying this new movement in the housing market. The new, more anonymized entities behave differently, she says. "There's just a more aggressive pursuit of profit. And if you're trying to extract more value, it's basically coming from one place—the tenant." B.C. is in a different category from Ontario, Quebec or the U.S. In spite of those high-profile purchases, August's data shows that the penetration of REITs into the B.C. housing market has been lower than in the east, a phenomenon she attributes to this province's more stringent rent controls. Brokers and apartment analysts say there's another reason, which is that there's just not as much to buy here of the kind of product that real-estate trusts and institutional investors prefer—mid-size to large apartment buildings. "In Vancouver, the size of the purpose-built rental market is one of the smallest proportions in the country. There is definitely a difference in the characteristics of the stock," says Steve Pomeroy. Instead, B.C., and especially Vancou- ver, has proportionally far more amateur landlords than elsewhere, after a couple of generations that saw almost all new rental supply come from small-time investors. That includes mini would-be entrepreneurs supplementing their day jobs (university professor, plumber, MLA, sound technician, auto sales rep) by buying one or two or nine condos or townhouses to rent out. They've been joined by new immigrants and over- seas investors who've also seen that rental investments are a relatively low-barrier way to earn a living. The B.C. scene includes a cohort who inherited tiny empires of small, low-rise apartment buildings from a found- ing generation. And it is boosted by the many homeowners who have come to rely on tenants in basements, spare bedrooms or laneway houses to keep up with the mortgage payments on increasingly expen- sive houses. That scene includes people like Nitin Sharma, a 46-year-old Coquitlam father of two who runs a chimney-cleaning business as his main gig but, as a result of his parents' early investments, is also a landlord with a RENTAL HOUSING STARTS AS PERCENTAGE OF TOTAL HOUSING STARTS Metro Vancouver, 2017 To 2021 (5-Year Average) R E A L E STAT E BOWEN ISLAND 42.9% WEST VANCOUVER 26.9% NORTH VANCOUVER DISTRICT 19.8% NEW WESTMINSTER 20.9% NORTH VANCOUVER CITY 50.2% BELCARRA 26.7% ANMORE 13.4% PORT MOODY 25.1% COQUITLAM 21.3% PITT MEADOWS 2.2% MAPLE RIDGE 12.2% METRO VANCOUVER REGION 23.9% LANGLEY TOWNSHIP 16.3% LANGLEY CITY 9.7% BURNABY 11.3% SURREY 20.7% VANCOUVER 44.6% RICHMOND 8.7% DELTA 17.7% WHITE ROCK 19.7% PORT COQUITLAM 14.7% LIONS BAY 0.0% Rental Housing Starts as % of Total Housing Starts, 5-year Average from 2017 to 2021 50.2% 0.0%