fewer condo units coming to market in metro vancouver as presales slump
3 minute read
we apologize, but this video has failed to load.
try refreshing your browser, or
tap here to see other videos from our team.
tap here to see other videos from our team.
the slump in condo presales in the lower mainland has resulted in fewer projects being launched and fewer units coming to market, new numbers have confirmed.
only 35 projects were launched between january and july in metro vancouver and the fraser valley — 40 per cent below the five-year average, according to mla canada, a real estate sales and marketing company.
“it’s definitely a very stagnant market,” said barrett sprowson, senior vice president of residential at peterson real estate.
fewer than 400 units were sold during that period, an 85 per cent drop from historical figures, mla canada said.
in july, 572 units were brought to market in the lower mainland, a 33 per cent decline from the five-year average for that month.
a glut of more than 4,000 new condo units — either complete or in projects near completion — remain unsold in the metro vancouver market, according to rennie marketing systems.
the latest snapshot comes as a group of b.c. developers has called on the federal and provincial governments to relax rules for foreign buyers in order to spark activity in the presale market.
the b.c. government quickly rebuffed the request, while academics said peer-reviewed research that showed how measures for foreign buyers cooled a market where frenzied demand and steep price increases for presale units meant developers were making huge margins, while new buyers with local incomes, in particular, were struggling to get into in the market.
advertisement
not only has the volume of new projects shrunk, but so has the scale of projects. in july, eight new presale projects were launched in the lower mainland, but with far fewer total number of units compared to past years. six out of eight of the projects are in the fraser valley and for smaller, wood-frame buildings, said sprowson.
reduced foreign investment, high interest rates and softening rental income have led not only to a slump in the presales market but also coincided with a number of court-ordered sales and projects facing receivership.
recent examples of projects going through receivership processes include the luxury curv tower in vancouver’s west end and the chic chloe building on the west side.
some presale buyers of units at curv have asked for their deposits back. the developers of the 60-storey tower on nelson street owe over $90 million to lenders. presale buyers have been told the receiver is assessing contracts to determine next steps.
the receiver for the chloe project, a low-rise residential and retail building, is also trying to recoup over $90 million owed to lenders. it is preparing to sell 24 condo units with asking prices that are between 25 per cent and 30 per cent lower than what some presale buyers paid for them. one-bedroom units that had been priced at $1.1 million will be offered for under $749,000, according to real estate agent suraj rai, who is looking at initial price sheets.
advertisement
“land prices went crazy, but that’s the free market where there’s demand for land. a lot of developers will admit that they probably paid too much for some sites,” said michael ferreira, senior vice-president at anthem properties. “there is a now a reckoning to get some semblance of normality on the land front.”
the situation means that planning future projects is on hold for many developers.
the province in july introduced some changes, allowing developers to defer increases in development cost charges until projects are completed, which will help them to manage their capital during construction.
“it’s stuff that we would never have seen from different levels of government in previous years,” said ferreira.
“but at the end of day, it’s nibbling around the edges of the issue and not really moving the needle that much in terms of making a project viable or not. for that, we need some bold and significant initiatives.”
before moving to anthem in 2023, ferreira was founder of urban analytics, which provided developers with information on conditions and trends. he was one of the first analysts to call attention to intense price increases for presale condos in october 2017 when they were rising year on year by over 50 per cent and nearly 60 per cent in some areas.
advertisement
now, he says rethinking parts of the foreign buyers taxes and bans that followed this boom could be needed.
“it’s not just a developer who has a fancy suit and drives a fancy car. it’s everybody he hires and all the trades and suppliers. i’ve got a friend who is a partner in a construction company and they just had to do layoffs for the first time in 23 years he’s been there.”
share story
