Sale of Mansard Terrace – 14 Premium suites in Saskatoon, Saskatchewan
November 14th, 2024
I am excited to announce the sale of our very successful 14 suite rental project on 8th Street in Saskatoon. The sale has delivered substantial ROI to our investors, and I wish to congratulate the new owner on a successful acquisition. The project was transacted at a purchase price of $2,170,000 ($155,000 per door). We purchased the project in October of 2017 for $1,470,000, and have now exited the venture after reaching our pre-determined return on investment exit valuation. I believe, there are several more years of upside ahead in Saskatoon and the price per door will exceed $200,000 per unit within 24 months – and here are a few reasons why:
- Saskatoon is currently the hottest rental market in the entire country according to rentals.ca. The monthly report for November 2024 shows rental affordability 34th place out of 35 major Canadian cities, with rental growth in the province of Saskatchewan up 17.1% from November of 2023. Rents reached an average of $1,358, remaining significantly below the national average, leaving plenty of room for upside and value increases for years to come. . Saskatoon had the largest Y/Y increase in rents of major cities in the whole country for November 2023/November 2024 at 18.9%.
- Immigration. Despite the fact that the federal government has announced a 20% reduction in permanent residents in 2025 – to 395,00, don’t be fooled. This is still a whopping 60% increase from the average 250,000 in the previous decade. Cost of living is nearly impossible in Toronto and Vancouver, and a large majority of these people end up in Saskatoon as it is an incredibly diverse city with good job prospects and low cost of living – for now.
- Economy. The conservative Saskatchewan Party was recently re-elected for 4 years, and there is reason for incredible optimism going forward with Saskatchewan’s diversified economy. Sask has been a staunch opponent of carbon taxation, is pro business, and will continue to attract investment in the years ahead and will lead growth once the federal Liberals are defeated in the 2025 federal election. Saskatoon’s population grew by an estimated 14,400 people from Oct 1, 2022 to Oct 1, 2023, the largest year-over-year increase since World War II.
- Interest Rates. With the BOC lowering the prime borrowing rates, BRRRR projects are suddenly back in plan as interim financing costs reduce. The fixed rate market based on the BOC and CWB bond rates has held steady, however there is reason to believe these rates will also taper in the next few months. This will allow investors to qualify for larger mortgages, hence take on more leverage to justify higher purchase prices as rents on the prairies will also continue to increase.
Six out of the 10 most affordable small and mid-sized cities for average apartment rents in Canada were located in Alberta, including Lloydminster ($1,176), Fort McMurray ($1,308), Grande Prairie ($1,374), Medicine Hat ($1,396), Red Deer ($1,470), and Lethbridge ($1,489). Located outside of Alberta and also in the top 10 most affordable were Sherbrooke ($1,300), Regina ($1,390) and Saskatoon ($1,433). The most affordable markets in Ontario and B.C. were Windsor ($1,623) and Abbotsford ($1,877).
Several small and mid-sized cities continued to post double-digit annual rent growth for apartments during October, led once again by Lloydminster (also Canada’s most affordable market) with a 24.3% increase. Pointe-Claire in Quebec followed with a 23.1% increase, with Saskatoon (+18.9%), Lethbridge (+13.0%), and Gatineau (+13.0%) rounding out the top five. Sarnia was the only Ontario city to be ranked amongst the fastest growing for rents in Canada, with an 8.9% annual increase. In B.C., Nanaimo (+9.9%) and Abbotsford (+4.5%) made the top 15.
It is important to keep in mind real estate in Canada is regional, one area can have soaring prices and rents, with another area the exact opposite. Prices and rents in Ontario and BC are starting to see pressure as the cost of living challenges persist. Real estate investment in these provinces will be extremely challenging in the years ahead.
NOW is the perfect time to pick up a project in Saskatchewan or Alberta, and I hope that you do just that!
Happy Investing
Cory Sperle
