The vacancy rate of purpose-built apartments in Calgary decreased by 2.4 per cent in 2018 to 3.9 per cent, according to CBRE’s multi-family market overview.
And the report said average apartment rental rates increased by 1.9 per cent to $1,146 after two consecutive years of declines. Supply in the rental market also increase by 3.7 per cent year over year to 39, 567 units.
And the secondary rental market (rental condos) posted strong gains in 2018, with vacancy decreasing from 3.8 per cent to 2.7 per cent year-over year.
“The combination of the mortgage stress test, increasing interest rates, and the lagging effects of the economic downturn contributed to a 6.0 per cent decrease in condominium unit sales year over year,” said CBRE.
“Concrete condominium sales hit a five-year low in 2018 with only 295 unit sales over the course of the year, down from 414 units in 2017. Battistella’s NUDE project in the Beltline marked the first concrete condo project launch in the downtown submarket in 36 months. Investment in Calgary’s condominium market remained flat year over year, with a total transaction volume of just over $230 million, comprised of 1,110 units.”
But the report said the transaction volume is significantly higher than the 10-year average of $152 million. There were 12 transactions over $10 million during the year, which was a 140 per cent increase from 2017 and the second highest number recorded since 2005.
“We expect these strong multi-family fundamentals to continue to drive demand moving into 2019 with an emphasis on newly constructed product. Increasing rents, lower vacancy rates, and decreased rental incentives have spurred investor interest but a lack of available product may put a cap on deal volume,” added CBRE.
The report said notable factors contributing to the sharp improvement to the health of the apartment market include a continued increase in employment and stronger migration to Calgary relative to previous years.
“Additionally, Calgary’s lingering high unemployment rate may be deterring potential home buyers from making the shift from rentals,” said CBRE.
– Mario Toneguzzi for Calgary’s Business