Is Vancouver presale condo market a safe bet?
News that some builders in Toronto’s hot condo market are bailing on pre-sale projects poses the question: And, what about in Vancouver?
After all, this is also a market with skyrocketing pre-sale condo prices, as well as construction and land costs. In the greater Toronto area, some 17 projects, with over 3,600 pre-sale units offered for sale before 2017, were awaiting construction.
But they have been cancelled since the start of last year, according to real-estate-services firm Altus Group Ltd., which was quoted by Bloomberg in a piece called “That Gorgeous Toronto condo you signed up for? They just scrapped it.”
Generally, Toronto developers have been cancelling in greater numbers compared to past years because it’s harder to make money now that construction costs are more expensive and every subsequent pre-sale launch is asking for higher prices.
In Vancouver, there have been examples of this too with three projects that have been cancelled for various reasons after being pre-sold to buyers several years ago. Two higher-profile, but different examples are Vivagrand’s Langara West, a 72-unit development on Cambie Street in Vancouver, and Murrayville House, a 92-unit in Langley.
The Altus Group says construction costs in the Toronto area went up by six to eight per cent last year instead of more typically rising two per cent along with inflation. In Vancouver, it expects that the anticipated escalation this year will be in the five to seven per cent range.
Some B.C. developers, however, have been seeing even steeper climbs. “Last year, construction prices were as much as 20 per cent higher,” said Ian Butterfield, of Butterfield Development Consultants, which provides cost management services to developers.