Frank O’Brien
Van. Courier
Rampant land speculation fuelled by an avalanche of offshore money has driven new condominium prices to the tipping point, a senior real estate analyst warns.
“At a certain point buyers will just say ‘no,’” said Michael Ferreira, managing principal of Urban Analytics Inc., following his address last week to the Urban Development Institute, Pacific region.
Ferreira said “an immense amount of offshore capital” flowing mostly from mainland China into multi-family land speculation has nearly doubled the price of land this year and could drive future condominium prices into the stratosphere.
So far, buyers appear eager to pay what are already record prices, Ferreira told a lunch meeting packed with members of the development community.
In 2015’s first nine months, 2,000 more new condominiums sold in Metro Vancouver than in the same period in 2014, a 20 per cent increase. The standing inventory of completed and unsold concrete condominiums has plunged to just 70 units, despite more than 2,500 being completed since January.
Ferreira added that in downtown Vancouver, only six new highrise concrete condos remain unsold.
He said 21,600 new Metro Vancouver concrete condominiums are being marketed now for completion in 2018, 87 per cent of which are already pre-sold at record prices.
Average new concrete condominiums downtown are now selling for $1,100 per square foot and can top $825 per square foot along the Cambie corridor.
Burrard Place, by Reliance Properties and Jim Pattison Developments Ltd., has sold 350 condominiums since its launch this year, with half the units selling for more than $1 million and per-square-foot prices averaging $1,200.
According to the Colliers LandShare survey, land prices for potential highrise condominium sites in Vancouver’s downtown and west side were in the $175 to $200 per buildable square foot range at this time last year. Recent land prices are now being bid up to $300 and $400 per buildable square foot. Offshore land speculators have been outbidding local condo developers, Ferreira said, and the traditional pro-forma calculations no longer apply.
“The new rule is there are no rules,” he said.
© 2015 Vancouver Courier
