Downtown Vancouver condo market shows signs of life

The recent sale of 100 units at 2 Burrard Place might be the sign developers have been searching for after four dark years of cancelled and delayed downtown Vancouver presale launches.

Developers and industry experts are hoping the long-frozen downtown luxury condo market is about to thaw and that long-awaited marketing campaigns can finally get underway.

Landa Global Properties chief executive officer Kevin Cheung — who had put his 21-storey architectural landmark at 1818 Alberni on hold — told RENX last month developers were watching each other to see who would launch first.

“There’s a lot of anticipation there, who’s got the most courage to come out,” he said. “Overall, downtown hasn’t had the same amount of pick-up as some markets.”

Big presale at 2 Burrard Place
That same month the 35-storey 2 Burrard Place, a Pattison Group and Reliance Properties collaboration, swiftly sold 100 of 239 units to early registrants within the first two days of launching.

The partners had waited three years to launch the strata condominium project at 1261 Hornby St., the final tower of the $500-million mixed-use Burrard Place — which includes the city’s third-tallest tower, the 60-storey, 400-unit One Burrard Place, as well as a 13-storey class-AAA office tower.

One Burrard Place sold out in weeks in 2015 and nears completion. The office tower also nears completion and leasing is underway. The 2 Burrard Place tower will come online in the next five years, completing the million-square-foot complex that covers an entire downtown block.

So, could the four-year freeze finally be ending?

“Somebody had to try it (first) and everyone is looking at this one very closely,” said Dillon Sangha, market and advisory manager at Urban Analytics.

Part of the reason for the success of the launch, he said, is that the units are more affordable than the numerous other luxury downtown offerings launched in previous years.

Some of them start at 435 square feet in size, but the 30,000 square feet of amenity space, including a full-size lap pool, will likely make up for those compact unit sizes.

“It’s unlike a lot of the other projects on the west side of downtown,” said Sangha. “I think they have a uniqueness factor with it. A lot of the units offered for sale are smaller, with convertible living rooms, and are priced pretty good compared to a lot of the existing presale inventory.”

Some mitigating factors
The unit price averages around $1,700 per square foot, which is a discount compared to what it would have been a few years ago, he said. “This one did really well, what with the price point.”

The downtown market may benefit from recently decreased pandemic restrictions, increased immigration and the spillover effect of buyers looking outside the high-priced detached house market.

Sangha said that due to the cost of land downtown condos are necessarily expensive.

He said the market was partly impacted by the province’s bevy of tax measures introduced in 2018 designed to curb foreign buying, along with investment and speculation activity that appeared to be driving prices upward and leaving local income-earners on the sidelines.

Although the market had already been slowing prior to those measures, those looking to purchase a downtown investment would have been turned off by the hefty tax bill, Sangha said.

He said the measures created a price ceiling for buyers, who were suddenly looking at a possible 20 per cent foreign buyer tax, an added school tax on homes valued at more than $3 million and a speculation and a vacancy tax on homes left empty for half the year.

Properties over $2 million also pay a higher property transfer tax upon purchase. On top of those potential taxes, a luxury buyer would have to pay the five per cent GST on a new condo.

“The (new) policies were felt across the region, but I think it really impacted the luxury condo sector the hardest, and downtown for sure,” said Sangha. “Between 2018 to now, demand and urgency . . . is virtually non-existent for those years.”

Several projects delayed, or on hold
The luxury market, he added, depends to an extent on wealthy international buyers. Pandemic border restrictions also curtailed that segment of the market from viewing properties in the last year.

“You will have purchasers in the region, a select number who can afford (luxury condos), but obviously you have to market internationally to other areas as well to attract those presales,” said Sangha.

“I don’t have the exact definite information on how much of it was foreign, but it is part of it.”

Over the last few years, there are five buildings that had trouble pre-selling a total of about 180 units, he said. Those buildings will complete this year and many will have unsold inventory. Those units are priced higher than 2 Burrard Place, so it will be interesting to see how they sell, Sangha said.

As well, there are several projects waiting to launch that will come online with pricey product.

“It’s a little early to tell how this is being received. This is the news this week, but there are a fair number of units and projects in a position to launch a sales campaign in downtown, maybe about half a dozen or so. They’ve just been waiting for better market conditions since 2018.

“The recent strengthening in the pre-sale market across the region has made these projects more viable, in that range of what’s being achieved at Burrard Place — maybe even slightly higher.

“But, I also think there are still a number of these projects that purchased the land at prices that may not make prices work today and they may need renewed immigration and a little more of a push.

“Maybe that might come next year.”