Spot the Long-term Opportunities
At the 2019 CBRE Market Outlook Breakfast, Jon Stovell (President & CEO of Reliance Properties) noted, “People who have the balance sheet and are willing to ‘go long’ on a good development property with good holding income are going to come out in the next cycle looking good.”
With a variety of exciting initiatives taking place in the City of Vancouver, such as the ongoing review of the Broadway Corridor Plan, the forthcoming creation of a City-wide land use plan, and surging emphasis on additional rental developments & initiatives, the results of these efforts may ultimately transform the market.
For the investor that shares a similar investing mantra as Jon Stovell, the ability to spot long-term opportunities in the current market may prove to be fruitful down the road.
According to the October 2019 edition of the CBRE Canada Monthly Mortgage Commentary, the current 5 year mortgage spread is between 1.55-2.05% and the 10 year mortgage spread is 1.65-2.30%. For multi-family assets in particular, the availability of
CMHC Insured Financing offers even more accretive financing terms. As a result, investment opportunities providing immediate-yield and long-term re-development opportunities become that much more appetizing.