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How, Why to Recreational Land

Real Estate Weekly, August 28, 1998

We have asked Rudy Nielsen, of Niho Land and Cattle Company, the largest owner of recreational land in British Columbia, to report on why and how investors should consider rural acreage. This is Nielsen's report:

In 1982 our family changed its focus from small town, commercial investments to recreational land, where there is less risk and a better return.

Sales of all unimproved rural properties in BC rose dramatically from 1989 to 1995. Annual transaction values increased from $286.9 million in to 1989 to $819.9 million by 1995. That is a growth rate of 185 per cent. British Columbia saw 5,846 rural property transaction in 1989, rising to a peak in 1993 at 14,365 before dropping to 8,717 in 1995.

The average unimproved property price went from $49, 091 in 1989 to $94,061 in 1995 a 91 per cent average value increase in over five years. Out of a total 234,198,167 acres of land in BC, only 6 per cent are privately owned. Based on this statistic, demand is high for a limited supply of recreational land.

As the supply of cheaper properties dwindled in the early 90's, fewer people could afford to purchase. The consumer's choice was narrowed: drive further from the Lower Mainland or go into partnership to purchase the closer, more expensive properties. Since 1996, prices have generally leveled off, but some prime areas continue to rise.

For the average buyer, the major consideration is how far, in hours, the property is from Vancouver. Properties within a five-hour drive, including ferry line-ups, are in high demand. The Merritt region is one of the most sought after areas, but large ranches- such as Douglas Lake Cattle Ranch- take up a major chunk of the private land, leaving a limited supply of limited, higher priced property. I consider a good investment to be a couple of hours beyond the "five-hour corridor", specifically east and west of Williams Lake.

Waterfront properties will be a great investment in the future, especially as subdivisions are becoming more and more difficult to develop. Properties with regeneration of trees, especially those from 15 to 25 feet high, are always an excellent investment.

As real estate analyst David Baxter notes, the aging of the baby boomers is translating into long term demand for "a place to take the kids on weekends and holidays" and "a place for relaxation and recreation" for parents. The growth of telecommunication has also allowed workers to transfer to rural areas.

"Our company forecasts strong growth over the next ten years and is actively investing in recreational land throughout the province," Nielsen concludes.

For information on rural properties, contact your local Realtor. He or she will be able to help you search listings in any area that you are interested in.