Global appeal

During its peak years, Burnaby was a haven for speculative real estate investment due to its affordability advantage over Vancouver combined with its promising appreciation. But then the downturn hit, driving away many spooked speculators. The headlines during the height of the downturn even scared the most seasoned of investors. "It's the wise investor who can buy when the market is really bad," says Joel Chamish of Sutton Westcoast Realty. "But there were very few sales at that time, which tells me even the smart money was worried."

But like most markets, Burnaby has pulled an impressive turnabout. Prices have returned to their 2008 highs, sales volumes are 100 per cent or more of what they were and many Realtors report their listings selling out. However, even with turnaround, some buyers are still skeptical due to some back-looking headlines, reports Chamish. "Buyers are still calling me asking if things are bad, even thought prices have already appreciated 15 per cent since the spring."

Perhaps those same headlines have spooked investors as well, as they've been noticeably absent from Burnaby's recent buying frenzy, say Agnes Piaseczna and Richard Morrison of Investors must be ignoring the city's solid fundaments. In Maclean's magazine's first survey of municipal governments, Burnaby ranked as Canada's best-run city. It scored at or near the top in categories such as environmental health, recreation and culture and economic development. The overall cost of government clocked in at just $148 per person, much lower than the national average of $235. Burnaby is also debt-free and in fact has a federal reserve of more than $600 million.

Burnaby has also attracted an A-list of companies, despite modest spending on economic development. The city is home to major tech companies such as Electronic Arts, Creo and Telus. Its heavy industry counts Chevron Corp. and Petro-Canada. Burnaby is also a major office tower leader, with six of seven of this year's office projects in Metro Vancouver being built in the city.

Furthermore, Burnaby's abundant parkland, good schools and solid middle class make it an attractive place to families. It's also one of Canada's most multicultural cities, with strong in-migration. For example, in 1996 there was a Chinese population of about 8,000 in the city. Now, that number has almost tripled, with 21,000 from the Asian country. This has contributed to Burnaby's miniscule vacancy rate of just 0.5 per cent.

Indeed, while the fall of its boom years is bad news for speculators, Burnaby remains a solid place for cash flow and long-term growth for those who invest wisely. Burnaby's income property market largely revolves around its growing concrete condo market. Morrison advises investors to keep Burnaby's condo end users in mind when buying a property. These demographics include young couples and those 50-plus who are downsizing. With this target in mind, two-bedroom apartments boost an investments resale prospect down the road. Also Chamish advises investors to purchase condos built after 2002 due to past issues with the city's building code, which have led to problems with the structure of condos built before that year.

Piaseczna and Morrison have worked with many investors who bought condos near post-secondary schools to target students. For example, one investor from Dubai bought a two-bedroom and den near Simon Fraser University for $350,000. The landlord separated the condo into two one-bedroom suites, one of which included the den. "There's good cash flow coming from that unit," says Morrison. "He's not playing a short-term game."

In recent years, most condo projects are part of "mini cities" being built around SkyTrain stations. Such properties are popular with tenants because Burnaby is not the most convenient city to get around by car. "Our city planners chose not to have a freeway because we have transit-oriented development," says Morrison. This also allows renters who work in Vancouver to live in a more affordable area and not have to buy a car.

Chamish, who owns investment properties in addition to being a Realtor, likes to target professional tenants who make a good living and like the security of a quality condo. He finds his tenant profile likes condos that are not only close to the SkyTrain but that are also near retail, such as malls. Thus, he recommends investing around the Brentwood, Lougheed and Middlegate malls. A fairly new two-bedroom, two-bathroom condo around these areas might start at around $400,000, with rents averaging between $1,500 and $1,700. MetroTown, B.C.'s largest mall complex, also has an abundance of condos nearby. However, Chamish says the rent in that area is not enough to cover the extra $100,000 you'll pay to invest there.

To the south, there's a new development in the works over the next three years on the New Haven waterfront. Developers in conjunction with the city bought up the land. It will eventually include a mix of commercial and residential development-a mix of low and high-rises. "It will be quite affordable because it's towards Richmond where prices are lower," says Piaseczna.

From the December 2009 issue of CRE


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