experts: real estate column Tuesday, October 05, 2004

Camping and Investing

The slowdown in tourism over the past two years has resulted in some great deals in campgrounds and old resort properties in the B.C. interior.

By Ozzie Jurock

The B.C. government is making it easier to access Crown Land for general tourist development under an agreement inked this spring between the province and the tourism industry. This is welcome news for B.C. campground owners, who wish to expand and upgrade their existing facilities to attract the anticipated strong growth in the number of tourists coming to Canada's Banana Belt - BC. The agreement is meant to foster resort development, partly by bringing the tourism industry under the Ministry of Small Business and Economic Development, and firming up regulations on allowing resort projects on Crown Land. The decision is just one of the reasons (easier development, better draw for visitors) why investors should be scouting out campground properties this year near B.C. rural communities. The other is some very low prices. The slowdown in tourism over the past two years - U.S. visits to B.C., were off 4.3% last year for the second year in a row - has resulted in some great deals in campgrounds and old resort properties in the B.C. interior. However, that lowdown is not expected to continue in the future.

"When you look at a campground, you have to consider the best possible use for the land in the future," said Rudy Nielsen, president of Niho Land and Cattle Company Ltd. of New Westminster one of the larger owners of recreational land in B.C. Many campgrounds are in good locations and offer unique features Nielsen noted, such as lake or river frontage and, most important, they have commercial zoning and grandfather clauses in place.

"It is so hard to get zoning these days for new projects," he explained. For instance, under provincial guidelines introduced in 2002, no new buildings can be constructed within 30 metres of a fish-bearing stream, river or lake but existing buildings in such locations can be improved. In some instances, he added, investors will buy an old resort or campground for their own personal use with the idea of selling it down the road.

RV traffic into northern B.C. and the Alaska Highway route has slowed to a crawl in the past two years, which has spurred more owners to sell. There are between 15 to 20 campgrounds listed for sale this spring in the Cariboo region alone, according to Country Lakes Realty Ltd. A pattern change in where RVs are parked has also affected the market, noted Joss Penny of the BC Lodging and Campground Association of B.C. "A growing number of RV users are now camping, free, at Wal-Mart parking lots," he said, "and it is a growing trend." In Prince George, for instance, the arrival of Wal-Mart attracted so many RVers that the local campground operators convinced the city to enact an overnight parking ban in the Wal-Mart lots. Penny noted that the widespread forest fires in B.C. last year also led to a sharp decline in RV travel.

Recent price increases and tighter regulations at BC government-run campgrounds should allow some private operators to compete on a more level basis this season. BC Lands and Parks now charges $22 per night at the best public campsites, while the average at private campsites is in the $22-$25 range. The province has also started charging for parking and firewood at busy provincial parks and has mothballed some of the more remote public campgrounds. We found what appear to be some good buys in both the campground and resort market, especially when compared to non-commercial recreational property, primarily because of a somewhat depressed market. Lodging and campground operators reported a significant occupancy decline of 19.60% in August 2003 and 14.74% in September 2003 over the same months in 2002, according to a survey by the BC Lodging & Campgrounds Association which tracked operators who were affected by the forest first of 2003. Campground members reported a 17.63% decline in August 2003 and 9.50% in September 2003 over 2002. It has to be remembered that these declines occurred in what is normally the peak occupancy time for the reporting businesses. Gross revenues for lodging were close to $1.5 million for August and September 2003, a decline of $463,425 over 2002 - and 2002 was the recovery year from the 9/11 terrorism event. Gross revenues for camping in 2003 for the months of August and September combined were $828,893, which was $212,210 less than 2002 and $25,654 less than 2000. By adjusting 2003 revenues to reflect the average room and site rates in 2000, the loss in the lodging sector for August and September stated in 2000 dollars was $385,746 and for campgrounds $162,483, compared to a year earlier.

Average Occupancy for Lodging & Campgrounds

TYPE
August 2003 August 2002 August 2001
Lodging 60.3% 79.5% 78.5%
Campground 54.2% 71.8% 70.8%

Source: BC Lodging & Campgrounds Association

How about it as an investment? Well, the prices of residential waterfront lots in the Cariboo have increased nearly five-fold in the past 10 years, for instance, but commercial campground prices have merely doubled. The upside could be substantial. A real estate and an income play. While it might be difficult to get financing for the purchase of campgrounds, especially if the current income stream is low, most of the sales are owner financed. Your local credit union may be a good bet too. You may have to take the long term view from an income point of view but the right campground is a solid land investment right now in British Columbia.




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Related Links:

BC Lodging & Campgrounds Association

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Resort to Resorts



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