The District is in the Mount Pleasant area, one of the oldest in the city.
By Jean Sorensen
Cautious Vancouver developers are starting to dust off shelved projects that were downed by a lacklustre market during the past year, and nudge them forward into the rebounding real estate market, says Cameron McNeill, president of MAC Marketing Solutions, a Western Canada real estate marketing company.
But caution is still the key word.
“Generally, I am seeing the sophisticated developer who is being cautious and prudent in the market. We are not seeing everyone jump back in just because it is a good market. That’s probably a good thing because it was getting to be an overheated market in 2006-2007 and that was not healthy,” says McNeill, who serves clients in major B.C. and Alberta centres.
He says Vancouver has been the regional market first to rebound, with prices fast climbing back to pre-recession levels. “We are seeing a market that is significantly different from February and March of this year and most of the prices are back to where they were prior to the collapse,” he says. The price trend is not just for single-family dwellings, but also in the condo market both for pre-sales and resales.
An example is The James, a condominium complex in the South East False Creek’s Olympic Village area, developed by Cressey Developments. “In September 2008, we were literally days away from opening the showroom for presales,” says McNeill. But the tanking real estate market put the brakes on decision to open the sales office and the project was shelved. Looking back, McNeill said he believes that Cressey and MAC made the right decision.
Now, MAC has unwrapped the showroom and is finalizing prices and moving the project forward to the marketplace on presales. It’s expected they will begin in early 2010 just as the Winter Olympics are focusing attention on the Olympic Village area. Neill says the company is taking advantage of the number of individuals who will be drawn into Vancouver for the event, and also those who will come during the months afterwards.
“We are still sorting out the pricing,” says McNeill, so they can yield a “reasonable return to the developer”. But there will be cost-savings to the buyer, he says. “Construction costs are significantly down from what they were 18 months ago.” Savings from construction contracts that were not locked in can be passed back to the buyers. “But, prices have been reduced from the earlier highs,” he says, estimating that the buyer will see l0 to 15 per cent savings.
The James is not the only project to re-ignite after being left to smoulder. The Sage, located at the University of B.C., is another example of a mothballed project brought forward to the market by MAC. The 120-unit structure, with the average selling price at $800,000, is now 55 per cent sold after starting in the market in early October, says McNeill. These are luxury units located in close proximity to the university, a major golf course and park area.
Developer Amacon, which originally slowed its timeline for the District South Main project, increased it to capture the rising market. The District is located in the Mount Pleasant area, one of the oldest in the city. It has an artsy feel to it, which is captured in the design and floor plans within the building. Located at 7th Ave. and Main Street and featuring 250 moderately priced units, the project sold 175 units within three weeks . The District had a lead-in price of $223,900 for a studio of 425 sq. ft., while one bedrooms (between 544 sq. ft. to 616 sq. ft.) started at $279,900. Two bedrooms (from 763 sq. ft. to 978 sq. ft.) had a price that was comparable to some downtown properties, starting at $384,900.
McNeill says the revived projects represent a broad spectrum in pricing and markets. It is not only the low or high end of the market selling, but mainstream properties are moving as well in Vancouver, he says.
“We are dealing with a substantial market,” says McNeill, “not just a flash in the pan.”
While luxury goods markets remain high even in a recession, affluent sophisticated buyers who have the funds to carry forward real estate transactions are still wary. They have concerns about “capital preservation” and will sit on the sidelines until sure that the market has fallen as far as it will go, says McNeill. “When there is a long-term upside, they will come back to the market based on capital appreciation and capital preservation,” he says. The ability to sell high-end properties such as the Sage is a good sign that this buyer feels the market is moving up.
McNeill says he believes the Vancouver real estate market is also rebounding faster than other areas, as there is a reduced reserve of inventory. During the collapse of the market, MAC Bulk did a liquidation of units with deep discounts to encourage buyers into the market, resulting in 750 sales. “We wanted to give people the perception of a phenomenal opportunity. It worked well,” he says, adding that the liquidation was “something to light a fire” under buyers.
The real estate market is expected to stay stable in the short term in Vancouver and grow stronger in 2010, he predicts, with the Olympics bringing renewed focus on the province and an interest in real estate. “The impact of the Olympics will not be just 18 months but for three to five years afterwards,” he says. “It will have a significant long-term impact.”
