And it's not just Vancouver. Apartment Cap Rates in Canada

Back in May I wrote a piece Is your apartment market too expensive and getting bubbly? And compared how expensive things were up in Vancouver BC, with cap rates in the 2s based on broker's proforma numbers from recent sold deals. But it's not just Vancouver, cities all over Canada are sporting much lower cap rates than most value investors could swallow, ranging from 3.25 - 6.75%:

Clearly Colliers Canada didn't include the two Van deals I found, maybe they sold in Q1 (?). According to them the best pricing in any major city in the whole country is a low rise Montreal property, in the low to mid six cap range. Now compared to coastal 'Gateway' aka 'Sexy Six' markets in the US that's pretty good but it's nothing to make a value oriented apartment investor's heart rate jump. And if you're a freshly minted apartment/cre bootcamp attendee it's a far cry from that minimum 10 cap the guru said was out there just waiting for you to pick up.

Granted in Canada Bankers Gone Wild didn't happen in the early 2000s the way it did in the US so their real estate markets avoided a lot of the pain that went on south of the border. And Canada has been benefiting from growing international (think China) demand for their abundant natural resources. So and yes Vancouver could be considered a special case because it's a direct flight from Asia, and they're very immigrant friendly (especially if you're bringing skills and money) but even then the low is up 100bp to only 4.25 in Calgary, Victoria and GTA (Greater Toronto Area).

My question is; If you're buying at a cap rate in the fours, what exit cap rate are you anticipating? What does that do the selling price? Since we've seen Vancouver caps in the threes (and the 2s) it is theoretically possible that your 4.25% elsewhere in Canada will compress even further but how much money do you want to put on that bet?

BTW click here to see Colliers International Canada's Mid-Year Multifamily Report