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Home Buying, Market Intelligence | May 25, 2023

Vancouver Real Estate Site Sells for $95 Million Per Acre

In a recent sale, a Vancouver real estate site fetched an astonishing $95 million per acre. By comparison, suburban land prices reach up to $27 million per acre. These high costs will inevitably be passed on to new home buyers and renters.

Bowling Alley Site in Burnaby Sells for Over $22 Million per Acre

A former bowling alley site in Burnaby sold for over $22 million per acre. This sale reflects developer confidence in home buyers and renters’ ability to handle increased costs. In response to the expensive housing market, Metro Vancouver municipalities and the region have raised development cost charges (DCCs) by up to 46%.

Eye-Popping Prices and Developer Confidence

Vancouver’s real estate market has seen residential land prices reach dizzying heights. Recently, a 0.20-acre lot sold for $19 million, equivalent to $95 million per acre. Wall Financial Corp. seized the opportunity and plans to develop a 32-storey rental building on this property, as revealed by Mark Goodman of Goodman Commercial Inc., the deal broker.

Major Transactions Highlight Strong Demand

In another remarkable transaction, Marcon Development Corp. purchased a 0.76-acre land assembly site in Surrey’s City Centre for $21 million, valued at $27 million per acre. The site is approved for mixed-use residential towers at a floor-space ratio of 9 FSR. The sale concluded at the full asking price, demonstrating strong demand. “The competition was fierce,” said Stanley Chiu from Gammon International Real Estate in Vancouver.

Keltic Canada Development’s Ambitious Plans

Adding to the spree, Keltic Canada Development recently spent $94 million to acquire the 4.2-acre Brentwood Bowling Lanes site in Burnaby. Their vision includes erecting two to three residential towers within the next few years.

Steady Stream of Multimillion-Dollar Land Assemblies

The first quarter of 2023 continued the momentum from 2022, with substantial multimillion-dollar residential land assemblies. These transactions, along with smaller deals, contributed to a total land sales value of $7.3 billion, reported by the Commercial Edge of the Real Estate Board of Greater Vancouver. Although this figure included industrial and commercial properties, residential investments dominated the market. Last year, land sales outshined all other commercial transactions in the Lower Mainland, according to the real estate board.

Rising Costs for Developers and Buyers

At the April Vancouver Real Estate Forum, residential developers estimated the cost of delivering a basic apartment unit in Metro Vancouver exceeds $600,000 per unit, even before factoring in land expenses. This steep expense is primarily due to escalating input costs in the region. Developers are fiercely competing, often paying millions above property assessments to secure land.

Increased Development Cost Charges

There’s also an upward trend in development cost charges (DCCs) for residential projects. Richmond saw a 47% increase in DCCs, while Coquitlam’s increased by 33%. In Vancouver, DCCs for a new 1,000-square-foot apartment now total $32,000. Adding to this, Metro Vancouver’s board passed a resolution on April 19, mandating developers to cover 99% of future water and sewage infrastructure costs starting next year.

Impact on Homeowners and Renters

Dana Westermark, a developer from Richmond, highlighted the obvious: the escalating costs of land and development charges will inevitably lead to higher prices for homeowners and renters. “It directly impacts the final price of all housing,” Westermark told Glacier Media. “It’s unrealistic to assume that developers will absorb these costs without passing them on to consumers.”

With files from Western Investor

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