February 14, 2013

Developers bullish on Metro condominium market

‘Well-priced’ units near amenities, rapid transit have the advantage

Sales of new condominiums slowed in the second half of 2012, but there has  been an uptick in activity during the first six weeks of the new year, said Jeff  Hancock, a senior manager with real estate market firm MPC Intelligence.

“There were some moments of brilliance, for sure – there were some products  that did really well in the second half of the year as well,” Hancock said  Tuesday after the release of his firm’s Condominium Market Opportunities  Report.

Two successful projects he cited were Intracorp’s MC2 at Cambie Street and  Marine Drive and Station Square, which is the first phase of a new community  near Metrotown that is being built by Anthem Properties and Beedie Living in  Burnaby.

“They were close to selling out,” Hancock said. “Definitely a high percentage  of available units sold.”

Station Square is a five-tower development in Burnaby near Metrotown that  will be ready for occupation in 2015. Units are priced from $280,000 for a  studio apartment up to $1.35 million for a penthouse suite.

MC2 is a two-tower development on Marine Drive and Cambie Street in  Vancouver, directly across the street from the Canada Line. There are 443 homes  in 26-storey and 32-storey towers, with prices for one-bedroom suites starting  at $259,000 and two-bedroom suites at $421,500. The project opened for sale Oct.  27. Rennie Marketing Systems is selling the project.

Hancock said the units were sold for close to asking prices.

“Those projects were both well-priced, to begin with, for their respective  markets,” Hancock said. “They both boast transit-oriented locations, which is  really important in today’s market.”

He said these types of projects often charge a little less than other  projects because they are specifically targeting investor and first-time buyers  that will utilize transit.

Both investors and first-time buyers were purchasing, Hancock said.

“(There were) probably more investors than first-time buyers, but the two  major reasons that they performed as well as they did was the price point they  were asking, and the fact that they were large-scale, well-marketed,  transit-oriented developments,” Hancock said.

He said 2012 saw more new condo units sold than 2011, and that 2013 has  started well.

“We have seen an uptick in the first five weeks of the new year – there has  definitely been an increase in the amount of traffic compared to the later  fall,” Hancock said. “The number of sales being reported by developers seems to  have picked up a little bit in late January and early February.”

He said traffic was brisk this weekend at the preview of Wall Centre Central  Park, a new development near Metrotown on the Vancouver side of Kingsway. “There  was a high volume of people coming through. It was really, really busy, which is  great,” Hancock said. “They may not be writing deals yet, but from all initial  indications it looks like that will be a really popular development.”

At Polygon Homes, the projects that are selling well right now are those that  are ready to move in before March 31, said Neil Chrystal, Polygon’s president  and chief executive officer. Polygon is seeing a lot more people who intend to  live in their homes, rather than investors, Chrystal said. “The other thing that  is really prevalent is that first-time buyers are really stepping up right  now.”

He attributes these sales to the $10,000 grant for first-time homebuyers that  expires March 31. The bonus is a one-time refundable personal tax credit, equal  to five per cent of the purchase price of a new home to a maximum of  $10,000.

“We’re seeing a lot of action where homes are ready to move in before March  31,” Chrystal said. “We have a few sites we’re pre-selling, and they’re doing  OK.”

Polygon’s Red Maple Park development in Langley is ready to go and selling  well, with two and three-bedroom townhouses priced between $289,900 and  $329,900.

Chrystal said that in the last couple of years Polygon has not delayed or  cancelled any projects due to the slowing market. “We come up with a plan and we  adjust it – it’s very hard to predict the future. For the most part we feel  pretty good about the housing market,” Chrystal said. “The big reasons are the  low mortgage rates and strong immigration. We continue to see a lot of people  coming from abroad and wanting to live in Vancouver. If there are going to be  40,000 new people coming to B.C. this year, the majority of them come to  Vancouver and that creates real demand for housing.”

MPC Intelligence is predicting that 2013 will be relatively flat for both  sales and pricing.

“We may even see some price compression in some markets. Prices could go down  or developers could start to incentivize or negotiate a little bit more to keep  up a relative pace of sales,” Hancock said.

“I think developers recognize that in certain areas they’re going to have to  sharpen their pencils to generate sales.”

He said he’s heard rumblings about developers postponing sales or  construction until they meet their targets.

“That’s one of the things about the Metro Vancouver market that is  reassuring. We have a lot of sophisticated developers that have deep pockets and  who can hold their breath if they need to,” Hancock said. “You’re going to see  guys who don’t have to launch product into the market – you will see them delay  with no problem and control the supply.”


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