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Investing on the Fringe: Land values around BC’s biggest cities spark opportunities

Frank O'Brien, Western Investor, April 2015

There has been a long term strategy about real estate investing: drive an hour out of your city and buy land. And wait.

Today in Metro Vancouver, with suburban land cresting over $1.5 million per acre, the wait for many investors could be over, but lands of opportunity remain on the fringe of Vancouver and B.C.'s other large cities, analysts say.

All B.C. cities are partially hemmed in by the Agricultural Land Reserve (ALR), which protects not only farmland, but the value of non-ALR land.

One opportunity could be emerging this spring in Surrey, B.C.'s largest city. Development-ready land has been selling up to $1.6 million per acre, but Colliers International reports a recent dip in some land prices.

"Values continue to decrease as investors and developers attempt to sell their land," Colliers states in its recent LandShare report.

The reason is a - likely temporary - overbuilt concrete condo market situation in Surrey's core.

Surrey's lowest-priced development land now is in the Cloverdale area on the eastern fringe, at $1 million to $1.2 million per acre.

But drive another 45 minutes east and non-agricultural lands values drop quickly.

In Chilliwack, Sutton Group has a 32.4 acre land parcel for sale, 14 acres of which could be developed into a strata-title subdivision. The price is $699,000.

Re/Max has a 7.9 acre vacant commercial and residential development site with highway frontage listed at around $40,000 per acre. The listing agent suggested this is a five year hold-and-go strategy.

In the northeast corner of Metro Vancouver, where Port Moody blends into the forested wilds of Anmore, Imperial Oil recently sold a 232 acre parcel that has long-term development potential.

Vancouver-based and China-backed Brilliant Circle Group (BCG) was the buyer. Local buzz is that BCG paid $40 million for the land, which is considered a challenging development parcel.

Still, an acre of residential land in Anmore now sells for around $1 million, so there appears to be long-term potential.

Another major land sale in the Tri-Cities area is the 270 acre Westwood Plateau golf course, that was bought by a mainland Chinese investor group in March for $14.7 million.

This works out to around $54,000 per acre, notes Lawrence Lim, president of Mayfair Commercial Real Estate Advisors Inc of Richmond, who handled the sale.

Outlier Cities

Victoria has seen a recent rise in development, which may boost land values on the capital city's fringe. As an example of current prices, a 13.5 acre residential site in Saanich is offered at $814,000 per acre by Dexter Associates.

At the recent Jurock LandRush Conference in Vancouver, Rudy Nielsen, president of NIHO Land & Cattle Co and (founder of) LandQuest Realty and the largest private landowner in B.C. listed his top land markets near secondary cities.

His top pick is Prince George, with Kamloops right behind it.

"Prince George has it all. It is a hub city for the province."

The expansion of the Prince George airport and upgrading of rail lines to the container port at Prince Rupert makes the northern city a key container terminal in North America, he added. Nielsen added the northern city will remain the central service area for B.C.s' liquefied natural gas sector and its strengthening forestry sector.

Based on recent listings in The Western Investor, commercial and residential land on the fringe of Prince George, in five-acre, 10-acre and even 100-acre parcels, is selling for $15,000-$30,000 per acre.

Prices vary widely near the Thompson-Okanagan city of Kamloops, but a 100-acre lakeview residential site is listed by the Applegate Group for $975,000 and could be subdivided into five-acre parcels. Re/Max has listed a 5.9-acre industrial site, approved for five lots, at $500,000 an acre.

Nielsen is less confident in Nanaimo as a land investment play, which is a pity, because land prices near the Island city seem affordable.

DTZ Nanaimo has listed nearly 10 acres of subdividable industrial land for less than $300,000 an acre, as an example. Jay Cousins of Re/Max offers up a 12.8-acre of waterfront development site at Nanoose Bay for around $360,000 an acre. This, incidentally, is exactly $20,000 less than the average condominium price in Metro Vancouver.