Developer pulls plug on condos
Buyers will get their deposits back, but say they’re now priced out of market
Vivagrand Developments, a Vancouver-based firm that describes itself as the North American office of a property developer in southern China, has cancelled its Langara West condo project in the Cambie Street corridor.
It’s a rare move that comes as land prices in the area, as well as end prices for condos and townhomes in general, have surged.
It leaves 71 buyers of one-, twoand three-bedroom condos who, starting two years ago, locked into pre-sale contracts of around $700 to $900 a square foot with nothing but an offer from the developer to return their deposits, “plus an additional 50 per cent of their paid deposit as further compensation. For your $49,390 deposit, that means you will receive a total payment of $74,085.”
That’s little consolation in an area where prices for pre-sale condos are now going for between $1,200 to $1,400 a square foot, according to buyers who shared letters they received from Vivagrand.
They are reaching out to each other and potentially seeking legal advice.
Some say they are now priced out of buying other condos or homes in the area given the appreciation in prices.
Vivagrand said in an email, “the project will not be re-marketed and the property will be sold. This was an incredibly difficult decision, which was driven by extensive permitting delays, sharply rising construction costs and the subsequent loss of project financing.”
It explained to Postmedia: “Langara West submitted its development permit application to the City of Vancouver two years ago, in September 2015. To date, the final development permit for the project has not yet been issued. As such, construction has not yet been able to commence and the project would not be finished by the contractual completion date (July 2019).
Details in letters shared by the company with buyers reveal a possibly shorter timeline, and the city, in an emailed reply to Postmedia’s queries, agreed:
“The City of Vancouver is disappointed that the developer has chosen to halt the project at this time, when the permit is close to completion, after years of collective work on the project, and when the city is in dire need of more housing.”
In January 2017, Vivagrand notified buyers it had obtained construction financing for the development from CIBC and Canadian Western Bank. The company had also been keeping buyers informed about a situation involving a felled tree. It said in October 2016 that a tree on the corner of the development had been cut down without permission. The company hired a private firm to investigate, but was unable to identify the individuals involved. It then notified and worked with the city on a revised landscaping plan, which was submitted in April 2017.
“Unfortunately, in this instance, the timeline for issuance of permits was extended due to the fact that the developer repeatedly submitted designs that contravened bylaws and the site conditions set forth by council (and reiterated by staff ), which specifically required the protection of key trees on site,” according to the city.
In April 2017, Vivagrand let buyers know it hadn’t yet received a development or building permit and gave them the option to sign an addendum confirming a desire to continue their contracts.
“Accommodation of this tree was one of the city’s original requirements for issuance of the development permit,” Vivagrand told buyers, explaining there could be design and exterior landscaping changes.
The city said it gave the developer feedback on its submission in March 2016, but did not receive a redesign until April 2017, “a period of 13 months. During that time frame, a tree that council directed to be preserved disappeared from the property, which complicated the proposal and caused further delays.”
Around four months later, in mid-August, buyers were told the company was cancelling all presale contracts.
The developer acquired the land, which sits on the corner of Cambie Street and West 59th Avenue, in March 2014. The sites of the former Flamingo House Restaurant and two single-family homes were combined and sold then for $12.5 million. Commercial realtors estimate it is worth about triple that amount now.
“It’s an unusual case, we hope,” said Anne McMullin, president of the Urban Development Institute, which represents developers. “It is troubling and we are concerned about these. One is one too many when you have this lack of supply. People will not be able to buy back into another project.”
McMullin emphasized she wasn’t familiar with the exact financial details of the Langara West case, but, in general “with super high land costs, if developers can’t get permits and it’s taking too long, they can say, ‘I’m out.” They can stop it and sell the land. The money will go elsewhere. To Burnaby, Surrey, the (Fraser) Valley or Seattle.”
As well, she said, “only big developers can hold. The small and medium-sized ones get squeezed out.”
The city said “a review and approval of final designs across all City departments currently takes 12 to 14 weeks. (It) is focused on reducing this average response time, however, the response to the final submission for this specific project falls within that average time frame.”
Developer Vivagrand Developments blames permitting delays and rising construction costs for a decision to cancel a pre-sold condominium project at 7615 Cambie St. The per-square-foot market price for condos has doubled since the first buyers were locked in two years ago.