Best Time to Invest and Build

timthumbReport Challenges Apartment Industry, Says Now is the Best Time to Invest and Build New Rental Stock

(Vaughan, Halton, Markham, Waterloo and Toronto all poised for strong growth)

A report on the state of the Ontario Apartment Industry found the cities of Markham and Vaughan to be the best areas in Ontario to invest in purpose-based rental apartments.

“Vaughan and Markham have years of pent-up demand within its market,” says Derek Lobo, of ROCK Advisors Inc., whose company commissioned the report. “Vacancies are well below the provincial average and rents have increased well above the provincial average. There is plenty of repressed demand to fill any new apartments that open in the next couple of years, and more demand will be arriving in the years to come.

”The findings were part of the ROCK Apartment Report, a 72-page profile on the state of the Ontario apartment industry. The report profiled thirty-one of the largest and hottest apartment markets in the province, analyzing the towns and cities and offering frank advice on the best investment strategies for each.

“We looked at economic performance, job growth, the state of the current apartment market, trends in vacancies, rents, cap rates and supply,” says Lobo. “We’ve ranked those markets and we’ve put together a guide that will help developers, owners and investors acquire, manage and reposition, and then sell properties for the highest rate of return.”

The rankings are the most controversial aspect of the ROCK Apartment Report, but Lobo stands by the move. “The province of Ontario is not homogeneous, and neither is its apartment universe,” he said. “Some places offer better rates of return than others, and we’ve identified those areas and we have stated why.” Lobo further indicates, “there is too much pabulum out there, nobody has a real opinion anymore and they regurgitate head offices cautious talks and book end it with conventional thought.”

The rankings were reached after consultation with a number of independent analysts knowledgeable about their area of the industry.

The report found that confidence was increasing in the Ontario apartment industry. Having emerged from the 2008 recession in strong shape, factors have aligned to increase rates of return. “Investors have found that owning an apartment remains a significantly less risky investment,” says the report. “Not only is the risk spread out among many tenants, but low-rate insured financing from the Canadian Mortgage and Housing Corporation have allowed building owners to refinance their debt at favourable rates.”

The ROCK Report’s profiles included favourable rankings for towns and cities like   Ottawa, Markham and Oakville. Four cities in northern Ontario were cited as overlooked places to invest. “Investors are leaving money on the table by not tapping into the northern centres that are growing now. These well-established towns have sizable apartment markets, and times have gotten better in the commodities industry,” says one quote in the report.Although a number of centres were rated lower, Derek Lobo pointed out that the ROCK Report advised that no investor should turn down a good deal. “A poor deal in Markham isn’t better than a great deal in Niagara Falls,” said Lobo.

New Apartment Construction will be part of a three-day conference that ROCK Advisors will be hosting in Toronto from April 20 – 22, 2015. For more information and to pre-register go to rockadvisorsconference.ca

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