Derrick Penner
Sun
Greater Vancouver’s white-hot condominium markets appear headed toward equilibrium, consulting firm PricewaterhouseCoopers reported Tuesday, though builders in some areas run the risk of putting too many new units into the marketplace.
Craig Hennigar, vice-president of PWC’s real estate advisory practice, said the firm tracked fewer project marketing campaigns and noted a “moderate slowdown” of sales during the reporting period for the latest edition of its semi-annual report.
“In economic terms, that would be a soft landing,” Hennigar said. “You’ve got to get back down to the average, and I would rather get there by moderating rather than going way too far and overshooting [the marketplace].”
Hennigar added that developers could “overshoot” the combined market of Burnaby and New Westminster if they build all the units they contemplate building over the next 24 months.
Based on historical trends, Hennigar said that PWC forecasts that all the people who are going to move to Burnaby into new high-rise condominium apartments over the next two years have already purchased units.
However, he added that there are 2,500 units of high-rise condominiums in the planning stage within the Burnaby/New Westminster market.
Hennigar said Richmond/Delta, North Surrey and South Surrey/White Rock are in similar positions.
In Vancouver, on the other hand, Hennigar said projections show more people will want to move into high-rise apartments downtown than are being built.
Hennigar said the market is “at a point now where it might just become too expensive to buy, and too expensive to build.”
“The general message is that there are some risk factors out there, but we think developers are wise enough to take heed of what’s going on,” Hennigar said, and they’ll slow the pace of development, and make sure what they are building suits the market.
“A good project marketer can draw demand in,” he said.
David Podmore, president of the Urban Development Institute’s Pacific chapter, and CEO of the developer Concert Properties, agreed with PWC’s assessment that there are risk areas, such as Burnaby and Richmond, that could become over supplied, but doubts that situation will come to pass.
“I think we’ll see decisions be made to bring projects to market a little bit more slowly,” Podmore said.
Marketers, however, disagree that there is a potential for oversupply in some areas.
Bob Rennie, of Rennie Marketing Systems, said his company virtually sold out a three-tower project in New Westminster, and doesn’t see “a lot of supply coming up that’s going to hurt us.”
“There is no oversupply overhanging the market,” Rennie added.
Jason Craik, of MAC Marketing Solutions, added that population growth and immigration will continue to support demand.
© The Vancouver Sun 2006
