Getting too expensive to buy commercial property in Vancouver
Valuations are getting so high in Vancouver’s commercial market it is starting to affect deal flow, says a new report.
RealNet Canada Inc. says capitalization rates — the implied rate of return on a property — in British Columbia have gone so low that a 13% decline in sales in the first quarter can be attributed to the drop. The lower the cap rate, the more a property is worth.
“Transaction volumes experienced declines as the general market adjusts to changing value expectations in a record low cap rate environment,” said Paul Richter, director of research with RealNet, in the report. “Investment activity experienced a decline, however, demand for quality assets and development sites remains high.”
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