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GTA apartment market summary: Q2 2015

After a sluggish start in Q1, Q2 generated $471 million in apartment transactions
Thursday, August 13, 2015
by Richard Vilner

RealNet Canada Inc. announced 2015 second quarter results for the Greater Toronto Area commercial real estate and land investment markets. After a sluggish opening three months, the second quarter rebounded convincingly to reach its fifth best quarter of all-time in dollar volume, totaling $3.6 billion.

This represents gains of 38 per cent and 28 per cent versus the same period one year ago and the ten-year quarterly average respectively, according to the RealNet Index. This was driven in large part by a record number of transactions in the quarter (595), which led to gains in every sector when compared to Q2-2014, and a record performance in the residential land sector.

The apartment sector contributed $471 million, or 13 per cent to the overall quarterly total, with 56 multi-residential properties trading in excess of $1 million during the April to June period. On a dollar volume basis, this represents an increase of 44 per cent compared to the first quarter, and an increase of 57 per cent per cent compared to the same period a year ago. On a year-to-date basis, the apartment sector has totaled $799 million, 60 per cent greater than the first six-month period in 2014.

During the second quarter, there were a total of ten multi-residential property transactions in excess of $10 million throughout the Greater Toronto Area combining for $357 million, and having an average price per unit valuation of $221,532. The largest apartment transaction involved a 60 per cent interest sale in three towers within High Park Village, consisting of 750 units for a total of $104,574,797, resulting in an adjusted price per unit valuation of $232,388.

So far, year-to-date, yields continue to compress across the commercial real estate market throughout the Greater Toronto Area, with the apartment sector recording the lowest among all asset classes at 4.57 per cent on average. This represents a substantial decrease when compared to the average capitalization rate in 2014 of 5.04 per cent.

In addition, the year-to-date average per unit valuation has reached $206,921 per unit, which has increased by  seven per cent and 48 per cent from the 2014 average of $193,577 and the ten-year average of $140,075, respectively.

 Q2-2015 quarterly breakdown:

2015_Q2 Quarterly Breakdown

The above chart summarizes, on a quarterly basis, the total dollar volume and the total number of apartment transactions greater than one million in the GTA region. Q2-2015 reached $471 million, with a total of 56 assets trading above $1 million.

Q2-2015 transactions:

2015_Q2 Transaction Bubble Chart

The above chart summarizes second quarter apartment transactions greater than $1 million in the GTA Region geographically and by dollar volume (the larger the

Richard Vilner is Research Manager at RealNet Canada Inc. RealNet Canada Inc. (www.realnet.ca), the leading real-estate information services company in Canada. Founded in 1995, RealNet’s core information product provides coverage in both the commercial real estate investment and residential development markets, powering the decisions of firms involved in approximately 75% of the market activity. RealNet Canada Inc. is an Altus Group company.

 

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