Is UBCO Kelowna Real Estate an Investment Opportunity for you?

In today’s blog post, we look at whether the UBCO Kelowna Real Estate Area might be an Investment opportunity for you. In particular, focusing on Condos in the Academy Way area.

We will cover current Developments Pending, the types of Buyers, & some of the Pros and Cons of purchasing in this area.

UBCO Kelowna Real Estate: Current Developments

 

In the ever-expanding UBCO area of Kelowna, two new projects are currently before Council.  975-985 Academy Way * will provide 21 units as part of a mix-commercial project, while 825 Academy Way brings 451 units across three buildings.

*Note – this Development land is currently for sale MLS® List Price $2,999,900, as of October 2024 with RealtyMonX.

These developments cater to growing student housing demands, offering rental units close to campus with easy access to academic resources. Both projects align with the ongoing need for housing near UBC Okanagan Campus, as its student population continues to grow.

UBCO Kelowna Real Estate: Existing Buildings

For Buyers

Currently, the University District already features several established residential condos, including Academy Hill, U1, U2, U3, U5, U6, U7, and U8. These buildings offer a mix of one-bedroom, two-bedroom, and three-bedroom units.

As of October 21, 2024, there are currently, 23 condos for sale, priced as follows:

• 1 one-bedroom unit listed at $388,800.
• 11 two-bedroom units ranging from $415,000 to $579,000.
• 11 three-bedroom units priced between $524,900 and $645,000.

View Current Listings here

For Renters,

Popular options include Ivy Walk, Ivy Hall , and Veda which provide modern, student-focused accommodations within walking distance of UBCO.

Looking at current classifieds here are some examples of rental rates:

• 1 Bedroom Veda units currently listed at $1,350 to $1,675.
• 3 Bedrooms U District  $3,000 – $3,300
• 2 Beds 2 Baths with 2 Parking – $2,200.
• 1 room in U3 $1,200.

Who Might Be Interested in Buying in This Area and Why?

Different types of buyers are drawn to the UBCO Kelowna Real Estate area, including:

• Investors: Seeking rental income from student accommodation.
• Parents: Buying properties for their children attending UBCO.
• First-time homebuyers: Looking for an affordable entry into the Kelowna market on great transit routes.
• Younger demographic: Wanting proximity to both UBCO and Kelowna’s tech sector.

The Pro’s: Why Buyers Invest in the UBCO Kelowna Real Estate Area

1. Proximity to UBCO: With the campus just a short walk away, properties in this area have guaranteed demand from students, staff, and faculty, ensuring high occupancy rates and reliable rental income.
2. Growing Demand: UBCO’s ongoing expansion and increased student enrollment heighten the need for nearby housing. With projects like 825 Academy Way adding 451 new units, developers are actively addressing this rising demand.
3. Potential for good Rental Yields: Investors benefit from consistent returns, as university students seek accommodation year-round. Properties like the 1-3 bedroom condos (with prices ranging from $388,800 to $645,000) are ideal for students. A key advantage of these projects is their typically lower strata fees, as they aren’t burdened by costly amenities—thanks to the proximity of UBCO’s comprehensive facilities like gyms, libraries, and recreation centres.
4. Future Development: Planned infrastructure projects, such as the new Bus Transit Centre near John Hindle Way, will further enhance the area’s appeal by improving connectivity to the rest of Kelowna​
5. Desirable Community Amenities: The University District provides a self-sufficient living environment with proximity to cafes, restaurants, parks, and recreational spaces. This ensures long-term property value,  with access to transit & modern conveniences.
6. Affordable Entry into Kelowna’s Market: Properties in this area offer a more affordable option compared to Kelowna’s city centre, making it an appealing choice for first-time homebuyers or parents purchasing for their children attending UBCO.
7. Lower Vacancy Rates: The area’s location, within walking distance of UBCO campus, leads to a steady influx of renters, contributing to a lower vacancy rate and ensuring consistent rental demand.
8. Potential for capital appreciation. Parents can purchase a property while their child attends UBCO, typically over 3-4 years. Usually, they experience value increases by the time their child graduates, (though this isn’t guaranteed). This potential capital gain can offset much of the ownership costs. Effectively allowing them to house their student at little to no net expense. This makes it an attractive strategy for parents seeking long-term financial benefits from both housing and market appreciation

The Cons: For Buyers Investing in the UBCO Kelowna Real Estate Area

1. Vulnerability to Student Population: The area was hit hard during COVID-19 when students weren’t on campus. This led to higher vacancies, but it did open the door to it becoming a slightly less Student reliant area.
2. Price Volatility: When property values soared post-COVID, these higher purchase prices made it harder for investors to achieve strong returns. Timing is key. (Prices are at a much more attractive level currently – October 2024).
3. Interest Rate & Affordability Impacts: Rising interest rates during 2023/2024 priced out some parents looking to buy. It has contributed to an increase in supply, and softening prices during the last year.
4. Seasonal Market Fluctuations: Rental demand may drop during off-peak times like summer, affecting cash flow stability. It is much more difficult to rent after the start of the University school year. There are definitely ‘key times’ of the year to buy and sell.
5. The effect of changes by the Canadian Government regarding Foreign Student Caps – the Government is capping the number of international students at 30 per cent of a Post-Secondary School’s total enrolment. The Provost of UBC issued a Statement recently, and so far this has not been an issue.

Buying or Selling in the UBCO Kelowna Real Estate area

Are you interested in exploring real estate options in Kelowna’s University area? Contact me, Trish Cenci, at 250-864-1707 for expert guidance – I have been a specialist in this area for 19 years.