The property type investors should avoid?
It may be one of the hottest markets for investors, but there is one type of property potential landlords should avoid according to one industry veteran.
Waterloo is the current hot spot for investors and while many may be tempted to purchase student housing, that’s the one property type potential landlords may want to avoid.
“Student rental has been overbuilt,” Karl Innanen, managing director at Colliers International, told CREW. “A study was recently put out, which found that there is an oversupply of (rental units) — 27% more than the market needs.
“It’s something (investors) should avoid.”
The city has an oversupply of approximately 1,200 beds, according to the Waterloo Region Record, and with all the planned buildings that number is expected to skyrocket above 8,000.
According to Colliers, there are 41,440 post-secondary students in the Waterloo region but nearly 10,000 of those are commuters who don’t require student housing.
Still, the region does offer some interesting investment prospects.
Speaking to CREW last week, Innanen broke down the region’s most enticing opportunities.
Waterloo offers opportunities for office investment; Cambridge is known for its industrial offersings; and Kitchener is home to many urban office opportunities.
And there are plenty of residential opportunities throughout the region for investors as well.
“Residential is front-and-centre in the Waterloo Region; there are 3,200 new homes built every year … and the demand is there (for rentals),” Innanen said at the time. “There are a lot of condos being built; 2011 was the first time there were more apartments built than there were single-family homes.”
Indeed. The Kitchener Waterloo region saw its average home price increase by 8.9% year-over-year to $353,108 in January of this year, according to the Canadian Real Estate Board.