APARTMENT TRENDS

ApArtment trends the 2008 Barsalou Report Content 2007 Record Sales Year Vacancy Rates Among Lowest in Country 2007 Sales Average Rental Rates Rise Outlook for 2008 Historical Apartment Sales Apartment Properties Sold By Garry Barsalou Market Information by E-mail and Fax Page 1 2 2 3 3 3 4 4 Garry Barsalou Apartment Properties Specialist For more information about apartment ownership, purchase or sale, contact Garry at: Diversified Properties Ltd. 105-401 Garbally Road, Victoria, BC V8T 2K1 Telephone: 250.475.3700 • Fax: 250.592.1479 e-mail: garry.barsalou@shaw.ca 2007 ReCoRD SALeS YeAR What a year, $162,200,000 total sales volume with 1,293 units of multi-family rental apartment buildings sold in Greater Victoria. Included in 2007 were two large portfolios. The first being the Jawl Family to TransGlobe Property, consisting of 12 properties with buildings located in Esquimalt, Saanich and mostly James Bay. In total, a value over $50,000,000 and 356 units. Another portfolio was the sale by TransGlobe Property to CAP Reit of 5 buildings on the Gorge area with a total value of $46,000,000 and 371 units. 2007 also witnessed the sale of two concrete buildings for the first time in many years. These were a 73 unit high-rise on Dallas Road and a four storey 35 unit building with underground parking on Yates Street. In addition, BC Housing purchased two properties with 48 units each. These purchases are intended for future subsidized housing. The balance of market sales (18 properties) were arms length sales to local investors – some first time purchasers and others increasing their investment portfolios. A detailed 2007 sales by location is provided on Page 2. 1 2007 SALeS LoCAtIon Esquimalt Pandora Esquimalt Esquimalt Fairfield Cloverdale James Bay Esquimalt James Bay Hillside Shelbourne SALe DAte January February February February March March March March March March March March March March April April April May May June June June July August August September September September September October October October October SALe pRICe $466,666 $2,150,000 $2,350,000 $719,000 $4,850,000 $6,870,000 $11,290,000 $3,092,500 $5,400,000 $3,410,000 $5,820,000 $5,460,000 $8,770,000 $1,315,000 $2,700,000 $1,480,000 $3,550,000 $10,600,000 $4,950,000 $2,100,000 $2,050,000 $2,700,000 $4,700,000 $1,750,000 $6,000,000 $1,211,000 $13,460,000 $20,405,000 $12,315,000 $2,100,000 $2,500,000 $4,740,000 $930,000 # SuIteS 5 24 25 6 41 48 55 29 43 28 46 45 62 16 31 12 37 73 34 20 23 28 41 17 35 8 111 163 97 24 22 38 6 pRICe peR SuIte $93,333 $89,583 $94,000 $119,833 $118,293 $143,125 $205,273 $106,638 $125,581 $121,786 $126,522 $121,333 $141,452 $82,187 $87,097 $123,333 $95,946 $145,205 $145,588 $105,000 $89,130 $96,429 $114,634 $102,941 $171,429 $151,375 $121,261 $125,185 $126,959 $87,500 $113,636 $124,737 $155,000 VACAnCY RAteS RemAIn Among LoweSt In the CountRY Vacancy rates in the metro Victoria area remained unchanged at 0.5% for the third consecutive year. Strong demand and limited supply have contributed to Victoria boasting the second lowest vacancy rate in the country, surpassed only by Kelowna, BC which has a zero vacancy rate. Demand continues to be fuelled by net in-migration to the Capital Region and growth in youth employment. Conversely, builders have undertaken very few new rental housing projects due to the reduced economic viability as a result of the high land, labour and material costs. Compounding this is the skyrocketing home prices in the area. The average home price in Victoria hit a new record high of $624,450 in December, 2007. Gorge West James Bay Oak Bay Esquimalt Fernwood Gorge James Bay James Bay Yates Victoria West Fernwood Oak Bay Fernwood Yates Fairfield Gorge Gorge Gorge Quadra Rockland James Bay Fairfield 2 ApArtment trends the BARSALou RepoRt SPRinG 2008 outLook foR 2008 After a number of years of increasing values (combined with METROPOLITAN VICTORIA a difficult financing environment as a result of the US sub1980 TO 2007 prime lending market), there will be a slowdown as the market adjusts. Lenders have increased their interest rate spreads due Source: CMHC Victoria PERCENT to the shortage of funds – resulting in higher rates and lower 4 loan amounts. This will impact buyers investing criteria, allowing for an adjustment for a higher return or capitalization rate. 3 On the income side of the equation rental accommodation, it is still in high demand even with the onset of the condo 2 boom. Rent increases to existing tenants are controlled by legislation at 3.7% this year, but there should be an 1 overall 5% increase due to both legislative rent increases and tenancy turnover. The increase in rental income will 0 be offset by increases in operating expenses due to higher 80 82 84 86 88 90 92 94 96 98 00 02 04 06 07 energy costs and insurance premiums (as a result of increased replacement construction costs), property tax, labour cost and no net income gain. Apartment owners should realize that their investments are at an all time high with an adjustment period in the market due to the lending environment, and increasing operating expenses. APARTMENT VACANCY RATE AVERAGE APARTMENT RENTS Metropolitan Victoria October 2004 to October 2007 $ 1 100 $ 1 000 $ 900 $ 800 $ 700 $ 600 $ 500 2004 2005 2006 2007 AVeRAge RentAL RAteS RISe Average rental rates for apartments and townhouses in Metro Victoria rose five percent over the past year. Source: CMHC Victoria $ 400 BACHELOR 1 BEDROOM 2 BEDROOM 3+BEDROOM HISTORICAL APARTMENT SALES totAL AggRegAte VALue $12,561,000 $12,962,600 $12,851,500 $16,724,840 $68,507,900 $4,546,900 $16,426,000 $16,892,600 $30,238,500 $12,540,000 $19,742,000 $63,175,000 $52,941,750 $162,204,166 YeAR 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 totAL BuILDIng SALeS 11 11 11 13 14 7 9 14 17 14 22 33 17 33 AVeRAge peR unIt VALue $63,120 $69,320 $56,087 $62,875 $60,466 $54,130 $56,838 $60,984 $79,575 $60,000 $74,498 $95,000 $82,208 $125,448 totAL unItS SoLD 199 187 210 266 1,133 84 289 277 380 209 265 665 644 1,293 AVeRAge BuILDIng unIt SIze 18 17 19 20 81 7 32 20 22 15 12 20 38 39 peR unIt VALue RAnge $45,555 - $94,857 $55,000 - $121,875 $47,867 - $88,750 $53,333 - $88,055 $51,245 - $77,404 $39,286 - $77,000 $51,250 - $70,333 $37,943 - $76,000 $51,143 - $111,063 $48,889 - $110,000 $48,333 - $120,750 $60,333 - $208,750 $81,667 - $152,813 $82,187 - $205,273 ApArtment trends the BARSALou RepoRt SPRinG 2008 3 ApARtment pRopeRtIeS SoLD BY gARRY BARSALou Garry continues to successfully sell numerous apartment properties and has over the last 6 months sold 325 units totaling $40,000,000. For over 20 years, Garry has consistently sold more apartment buildings on lower Vancouver Island than any other realtor in the area. If you are looking to sell your aparment complex, contact Garry Barsalou to get the absolute highest price and the most specialized marketing of your apartment property. Call Garry today for a confidential market evaluation of your building. OLD S 477 Superior Street, Victoria 38 units, $4,740,000 OLD S 1185 Yates Street, Victoria 35 units, $6,000,000 OLD S 1764 Oak Bay Avenue, Victoria 41 units, $4,700,000 OLD S 660 Niagara Street, Victoria 34 units, $4,950,000 mARket InfoRmAtIon BY e-mAIL AnD fAx Apartment Trends, new listings, recent sales activity and market news are all available by facsimile, and e-mail. Please contact us with your fax number and e-mail address to receive the most up-to-date information on the apartment industry. I HAVE APARTMENT BUYERS READY, WILLING AND ABLE TO BUY YOUR APARTMENT PROPERTY. Call for me today for a confidential market evaluation of your building! Garry Barsalou, Apartment Properties Specialist Diversified Properties Ltd., 105-401 Garbally Road, Victoria, BC V8T 2K1 Telephone: 250.475.3700 • Fax: 250.592.1479 • e-mail: garry.barsalou@shaw.ca 4