Presale condo cancellations also apparent in Vancouver
Developers cancel pre-sale agreements
Ephraim Vecina
Mortgage Broker News
Amid reports about the rash of presale condominium cancellations in Toronto, a similar phenomenon has also become apparent in Canada’s other red-hot market.
In Vancouver, two high-profile examples of such projects that were cancelled for various reasons include Vivagrand’s 72-unit Langara West situated at Cambie Street, and the 92-unit Murrayville House in Langley.
Meanwhile, the Westbourne Residences by Jago Development in New Westminster is underway, but only after majority of buyers agreed to pay an additional 15% to their approximately two-year-old pre-sale contracts. Jago said earlier that it was unable to keep up with unexpected costs brought about by extreme weather, soil conditions, and labor shortages.
Despite the disquieting news, however, the number of condo construction projects delayed due to cancellations is not as bad in Vancouver (26 developments) as it is in Toronto (143 developments), the Altus Group said in a recent study. The Toronto projects haven’t started even though over 70% of their units have already been presold.
“The majority of projects that have not started construction launched sales in the last six months and may be awaiting demolition permits or construction contracts,” Altus Group senior director Matthew Boukall told Postmedia. “The Vancouver market is seeing a much, much lower number of projects not commence construction once they have hit over the 70% sales test.”
Boukall added that another factor influencing the Vancouver market is that presale prices in the city – which in the last two years alone have increased between 30% and 60% – have been “elevated” for much longer than they have been in Toronto.
The Altus Group report noted that B.C. developers have encountered dramatic upward spikes of “as much as 20% higher” in construction prices. This is compared to the 6% – 8% increase observed in Toronto, and the 5% – 7% range anticipated for Vancouver this year.
B.C.’s large increases last year were not due to “buying land or getting permits, but the higher cost of labour due to shortages in trades, relative to the amount of work,” according to Ian Butterfield of Butterfield Development Consultants.
Most of Metro Vancouver’s condo projects are by “developers of reputation who have a continuous stream of projects they want to sell,” Butterfield added. “Their deep pockets mean they can absorb the increase, and it’s also likely they bought land a long time ago. Their profits will be reduced, but the project still makes sense.”
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