Swedish Firm Aims to Buy 10,000 Canadian Apartments in Next 3-5 Years


Roger Akelius

“Akelius Real Estate Management Ltd., Sweden’s largest private own multi-residential company, has set its sights on the Canadian apartment market.
Over the past few months the company has purchased five properties (209 apartments) in Toronto and intends to buy another 800 units this year. Canada’s largest city is its primary focus currently but Akelius does intend to buy in other major centres in the future.
Akelius, which has a property portfolio of 35,000 apartments in Sweden and Germany, views Canada as a place with characteristics that are very similar to its home market: relatively safe and stable and with a growing population due to a steady influx of immigrants.
“We researched the U.S. too and the [finding] was Canada has the good things of the U.S. but not the bad things,” said Jordan Milewicz, the President of Akelius.
Canada’s population growth, which Akelius figures will be powered by immigration of about 240,000 people per year, looks good when compared to forecasts for a declining population in Germany and recession or worse in much of the rest of Europe. “Germany is the only market I would say where you are able to purchase anything without any risk or with a small amount of risk.”
Beyond Toronto, Akelius will need to look at other large cities to reach its stated goal of 10,000 units within three to five years. Those include Montreal, Calgary, Edmonton, Vancouver and perhaps Halifax.

– from ‘Swedish Firm Aims to Buy 10,000 Apartments in Next 3-5 Years’, renx.ca, 26 Mar 2012

Forget the helicopters, the Swedes are coming!
We said we look for bullish stories as ardently as bearish, and Zerodown sent this along saying: “Here’s a bullish anecdote!”.
It is intriguing that the Canadian numbers look better to these guys (Vancouver included!?) when compared with the US.
The article ends: “The Wikipedia entry for Roger Akelius describes him as an entrepreneur and author of technical books on computer programming who is currently in his mid-Sixties. In 2010, it was reported that Akelius, who now lives in the Bahamas, would donate 100 million Kroner (about $15 million) over 25 years to a children’s charity in the wake of the earthquake in Haiti.”
Perhaps exactly what the Vancouver rental market needs… subsidies from foreign philanthropists!
– vreaa

29 responses to “Swedish Firm Aims to Buy 10,000 Canadian Apartments in Next 3-5 Years

  1. Village Whisperer

    I know a yellow helicopter he could use to scout out some properties.

  2. I don’t think he’s in the rental subsidy business, so it’s to be seen what wages he’s banking on. He may have capital and some savvy to foresee a devaluation and move in after speculators get shaken out. Seems a guy to watch.

  3. The JAPANESE did the same in the US. Look what happened there. History repeats..Dumb people.

  4. Joe_blown_away_by_high_housing_costs

    When they speak of “buying apartments” does this mean individual condo units or entire buildings of purpose-built rentals? The story linked to talks about entire buildings in Toronto so that would suggest purpose-built rental.

    In 2006 Transglobe Property Management went on a buying spree of older purpose-built rentals with lots of gentrification potential. After buying my building, they renovicted all the tenants. Before renoviction my rent was 580. After renovations I went back and posed as a prospective tenant and they wanted 950 for my unit.

    I hope this Swedish company isn’t going to do this. Tenants can’t take any more attacks. We’re only hanging on by a thread.

  5. bullish anecdote for RENTAL market actually. infer what you like. target is mid to high end
    http://tinyurl.com/7g764jf
    from brochure ->
    We think that the rental market for flats in Canada
    will grow and that more people will recognise what
    a simple and flexible way of living this provides. We
    also believe that tenants will be particularly attracted
    to rental accommodation where the landlord has
    a long-term experience and a long-term investment
    horizon.

  6. Good for them if they can make it work. Sweden has a huge housing bubble though, so I wonder if their perspective is skewed.

  7. Seems like some Madoff scheme to me. Check out company info:

    http://www.akelius.ca/websida/canadianinfo.asp

    The address is “100 King Street West, First Canadian Place
    Suite 5600”. If you google this address, you can find more than a few companies with the identical address. Sounds like suite 5600 is some kind of virtual office that has mail forwarding service or something.

    The skeptic in me asks, how can a company planning to invest at least $1 billion (estimate 10000 units x $100,000, just to be super conservative) in the Canadian market not have set up a more proper office?

    • Good find. Knowing that Swedish have to pay an ungodly sum just to buy a right to rent an apartment, this cannot be good for our society.
      30 years ago when international investors won bids to build along Coal Harbor, no one saw what was coming except for a few.

  8. A few residential REITs have plucked a few buildings in Vancouver for the right price, even recently. It’s a bit of a different market than condos.

  9. Relax, everyone. They’re not Asian.

    So it’s okay.

  10. the model is native to an environment where, i imagine, the ownership culture is different – like germany. if you google news, they’ve been active in the uk. the bubble probably benefits them. you’ve got all the people way over on one side and it’s unstable, so it is a strong market asymmetry that must resolve.

  11. Renters Revenge

    TransUnion Rental Screening Data Finds Rental Property Prices Remain Steady, Despite Higher Demand

    DENVER, CO–(Marketwire – Feb 9, 2012) – With rental vacancy rates at their lowest levels in 10 years*, a review of TransUnion’s proprietary rental screening database found that rental prices remained about the same between the fourth quarters of 2010 and 2011. The average rent for the nation declined from $831 to $820, though the average deposit increased from $269 to $284.

    “We’ve seen greater demand for apartments over the past year, but it hasn’t exactly translated into significantly higher monthly rental payments for consumers,” said Steve Roe, vice president of sales for TransUnion’s rental screening business unit. “This is likely a direct correlation to our economy today, with unemployment remaining stubbornly high. It’s important to note, though, that there have been regional differences with average rental payments in some markets increasing more than 10 percent in the last year.”

    http://newsroom.transunion.com/press-releases/transunion-rental-screening-data-finds-rental-prop-0849870

  12. It’s kind of fun to shop for renoviction-candidate buildings.

    Example:
    447k gross rent on $10 million 40-unit 1962 concrete tower at Burrard/Robson. What are expenses/depreciation on something like this? At $435/sqft it’s cheaper than most DT condos (it’s also 50y old). If you are willing to wait out the 2% yield and invest in improvements, I think there is clearly rental demand and potential for growth in rental demand, maybe even more once the market turns.
    http://www.collierscanada.com/5318

    • In Calgary, a typical hurdle rate for industrial capital investment is 15 to 18 percent. How can serious money find a home at 2%?

  13. it’s the immigration stupid!

  14. First thing I did when I saw this story is find out if this was a publicly traded company so that I could short it but unfortunately it is privately held.

  15. Well!… hmmm…

    If the Scandinavians are, indeed, mounting a ‘frontal’ assault on YVR…

    I, for one, am getting a front row seat in the DropZone.

  16. Everyone is looking for safety in a world of turmoil. Canada is relatively “safe” since it appears we survived the Great Recession. It’s not only the rich people from China. I’ve met a lot of rich Iranians who paid 80%+ of their real estate purchased here on 1 million+ condos/houses. Vancouver is similar to Tehran with the mountains.

  17. some of you guys are missing the pt. there are places in the world where renting long-term, perhaps even never owning, is normal. uk and can are places where home ownership became a cultural frenzy due the bubble. in the messy aftermath, there will be demand for what they are offering – good long-term stable rental situations from owners who know what they’re doing. they are expanding their model into the bubble zones.

    • You mean the model where shelter is a utility and speculation has been shut out due to efficient service? Kinda like a grocery store making a slim margin over the rate of inflation. All the staff make a living wage and the basic products are affordable.

      But then how would volume banks make money? You need banking. Society benefits when they skim off the cream. Consumption, my friend, get a loan, get it now.

      • that’s funny. i think somewhere in their lit, i read they buy cash and figure out later whether or not to finance (i.e. only under favorable terms). re: margins, don’t think the model is walmart but as always this is a question of value

  18. Thank goodness. Someone to buy up the final five failed condo towers in Toronto after the crash.

  19. Steve Bartlett

    Well, as some have said, gentrification is indeed the goal of Akelius Canada. I live in an apartment building in Toronto they purchased this year. They are hurriedly renovating vacant apartments by as much as 50%. The apartments don’t seem to be renting out, probably due to the poor condition of the rest of this building.

    The approach by their management company ‘BriarLane Property Management’ has been not only heavy-handed, but misquotes the law. We will start up our tenants association and deal with them.

    Case in point, letter under doors dated Friday June 21, 2013:

    Dear Resident of Unit #_____
    It has come to our attention that there is an air conditioning unit installed in your window.
    Section 629-19 of The Toronto Municipal Code Property Standards states that your windows must be equipped with a component to restrict the opening of your windows to not more than 100 millimeters.
    Having an air conditioner installed in this window clearly violates this bylaw and therefore, we must ask you to remove the unit immediately.
    We recommend purchasing a portable AC unit, which does not require the window to open further than it is legally allowed to. They can also be moved from one room to the next, which you may find more convenient.
    Any air conditioner units that are not removed by June 28, 2013 will be removed by our staff; we trust however, that with your cooperation this won’t be necessary.
    Thanking you in advance,
    Yours truly
    Akelius Canada LTD. 501 Kingston Road
    By its Authorized Agent and Manager
    Briarlane Rental Property Management Inc.
    Per:
    Adrian Ilie
    Property Manager

    If anyone were to Google the bylaw: http://www.toronto.ca/legdocs/municode/1184_629.pdf it would be immediately apparent there is no such restriction on window openings. The by-law states that there must be a “guard” for windows less than one metre from the floor, not climbable, for the protection of children.

    This is the second such warning given by Akelius via BriarLane. The first was threatening units with a charge for damages and violation of Lease Agreement if they possessed a satellite dish. We have no Lease Agreements, we are under The Residential Tenancies Act, http://www.e-laws.gov.on.ca/html/statutes/english/elaws_statutes_06r17_e.htm which simply offers no support for Akelius’ and BriarLane’s self-serving threats.

  20. Steve Bartlett

    Amendment: After renovating apartments, they are raising rents by as much as 50%

  21. “The address is “100 King Street West, First Canadian Place
    Suite 5600″. If you google this address, you can find more than a few companies with the identical address.”

    That’s because First Canadian Place is the tallest skyscraper in Canada. It also houses offices for BMO. I think they’re pretty legit. Step away from the tinfoil hat.

  22. Akelius bought the building that I and my Girlfriend live in in East York Toronto, they removed our live in superintendent so they could rent out his apartment. They installed granite counters and stainless steel fridges and now charge over $500 more per unit.
    The boiler has broken down many times so we have no heat (rads) or hot water. The new superintendent lives in another Akelius building blocks away and NEVER returns our calls. There’s never work orders so nothing gets fixed. They destroyed our previously award winning front gardens.
    We’re moving in a few months and I couldn’t be happier. Akelius is a horrible land lord.

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