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Influence of Asian Investment in Kelowna

November 24, 2016

The past 18 months have seen a significant increase in Asian commercial and winery property investment in the Okanagan valley, particularly in Kelowna. According to StatsCan, Kelowna is now the fastest growing metropolitan area in Canada with a 3.1% growth rate. Kelowna has attracted a good deal of attention in the business media recently, including feature articles in BC Business magazine and The Globe and Mail.  

Additionally, very low cap rates in the Lower Mainland, compounded by the 15 per cent residential tax for foreign nationals, is driving Asian investment and development into Kelowna and the Okanagan Valley.

A number of major transactions have been facilitated by Asian Investors including two high-density residential sites in the downtown core, summarized as follows:

  • The former Monaco multi-family site, an urban twin tower project on 1.04 acres, with DP approval for 161 hotel units and 128 condos sold via court-order for $6.5 Million.
  • The former Lucaya project, a 21-storey residential tower adjacent to Prospera Place arena and Waterfront Park, was acquired via court-ordered sale and has been rebranded as 1151 Sunset Drive and is in active pre-sales mode.
  • Lake Okanagan Resort, a 125 room, lakefront resort with a 9-hole golf course, tennis, marina, restaurant on 300 acres, sold in excess of $10 Million.
  • 1601 Bertram Street, a 13,000 sf single storey commercial building downtown (home to K96.3/Country 100.7 radio stations) sold for $2.4 Million, representing a 5.2% cap rate.

Asian investors are also actively pursuing wineries and golf courses throughout the valley, in some cases due to the prestige they offer. Six vineyards and wineries have been brokered by Macdonald Realty Kelowna. There are numerous examples of large land parcels (often 50 acres+) being purchased, and because in some cases they include functional businesses, they also meet the criteria of the federal government’s immigration and foreign investment policies.

Although Cap Rates have compressed over the past 2 years, both foreign and domestic investors are flocking to Kelowna because the capitalization rates are much higher than in Vancouver.

Article thanks to HM Commercial Group http://www.hmcommercial.com

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