Vancouver condo projects canceled on financing difficulty
The Eden Group is cancelling two local development projects citing difficulty getting financing and skyrocketing construction costs. The Elyse, a 119-suite condominium complex at 7th and Scotia Street in Vancouver had pre-sold 55 units, but letters are now going out and deposits will be returned.
“The industry itself — very difficult to get financing,” Eden said on Monday. “Basically, it’s extremely uncertain whether I can actually complete that building.”
Eden is also cancelling a $30 million townhouse development, with that site already up for sale. A Third Eden project at 11th and Sophia is currently under construction and will be completed as planned.
Hmmm.. Now why would it be difficult to obtain financing in a booming real estate market?
Full story on the CBC website
RSS 2.0 comments feed. Both comments and pings are currently closed.
November 27th, 2007 at 11:03 am
November 27th, 2007 at 11:13 am
November 27th, 2007 at 11:16 am
Are we running out of greater fools?
November 27th, 2007 at 11:26 am
I think there are lots of fools, just they are not willing to pay more than market rate to fund the development. Land prices must be crushing.
November 27th, 2007 at 11:41 am
November 27th, 2007 at 12:36 pm
Anyway, I also noticed in that area that Rennie’s Dwell bldg which had an office at Main/Quebec has been very quiet in the past four months since they closed the pre-sale office. They even kicked out a bunch of charities including Vancouver Poppy Fund, and now the building sits empty. Maybe didn’t get enough pre-sales to keep the banks interested?
Signs looming?
November 27th, 2007 at 12:40 pm
My thought also…
November 27th, 2007 at 1:05 pm
So true!!
This developer is the first of many in my opinion to have issues with not selling all of the units via pre-sale and subsequently not being able to arrange project financing. The credit crunch is impacting our local real estate market.
November 27th, 2007 at 1:56 pm
November 27th, 2007 at 2:07 pm
November 27th, 2007 at 5:27 pm
November 27th, 2007 at 8:47 pm
that’s bad news for “bubble lovers” some presure off from supply and those ousted buyers will erase some inventory by 200 units.
“There are certain developers here in town who have hundreds and hundreds of millions of dollars as backup to ensure they can finish buildings and I can tell you I am not one of them.”
Those are Canada’s #1 developer Concord pacific and award wining bosa.
The Eden Group did a good job because of labour shortage cost can run them over like buldozers on construction site.
there was another non residential construction was brought to halt yesterday because of labour shortage.
Even in Edmonton some projects are half way halted because of cement shortage.
I do not beg for high prices but this insight explain that all.
OTHERSIDE
Boom times for construction to continue in B.C.just elyse is downThe outlook is for demand to continue to outpace supply, leading construction costs to rise by an average of 10 per cent this year, 11 per cent in 2008 and nine per cent in 2009.”
Hey I am not going to say thumsup taste the thunder but don’t say you don’t beleive this……
November 27th, 2007 at 9:43 pm
These guys are effective but can’t shift poorly conceived projects, which is what Elyse was.
November 27th, 2007 at 9:52 pm
There has never been a better time to buy.
November 27th, 2007 at 9:54 pm
November 27th, 2007 at 10:52 pm
November 27th, 2007 at 11:49 pm
The problem is that he did not sell enough and now does not have enough or want to use his own or private money to leverage and obtain financing. This, to me means, he does not believe in his own development. Small developer trying to make a quick buck instead of putting in his time (he will never become a top developer)
Also to take a swing at pre-sale because he failed was a cheap shot for his faults. He could have still gone the old fashion way at still tried to get private investors if he really believed in what he was selling.
November 27th, 2007 at 11:53 pm
They watch the rest of the worlds housing bubbles burst and can see the writing on the wall. Pre-sells are now only for the stupid. So…..they build the projects IF they can get financing and then probably lose a bundle. They know they will have to pay too much in labor and materials all of which MUST come down starting now.
The stated reasons they cancelled are NOT the real reasons. The real reason is the market has turned but they don’t want to air this publicly.
November 27th, 2007 at 11:58 pm
November 28th, 2007 at 12:03 am
Also, pre-sale being for the stupid is a terrible outlook. Without buildings being pre-sold there is a high chance of them never being built. In the end everyone looses if demand is not being met with supply.
Also, would you build something that someone may not want to purchase? It is actually a good way to make sure that your development is desired by the public and will succeed. I would rather have a building not move forward because not enough demand then a crappy building that went up and now empty
November 28th, 2007 at 2:09 am
The poster meant stupid for the buyer, not the builder. It’s smart for the builder of course.
The interests of buyers and sellers are always opposed, in case you haven’t figured this out.
November 28th, 2007 at 7:53 am
bingo!
even mortgage holders are paying 90 basis points over what a “normal” market would be.
i’m sure builders are facing the same problems, the easy cheap money is gone.
that’s bad news for “bubble lovers”
another classic “satvism”
November 28th, 2007 at 8:05 am
How exactly did he take a swing at pre sales? I watched the news and all he said was “pre-sales are a risk”, which, as far as i know, is just stating the OBVIOUS.
November 28th, 2007 at 9:32 am
Then why? non residential constructions are being halted in between.
“Yes there is a problem overall but if they sold 80-100 percent that would have not been an issue”
That is a big issue,they should have sold no big deal but look at that provincial article that rising cost,that’s mean “currently selling price are under estimate”but future cost is expensive (over budget)so they will definitely run into trouble like the one of “river band” either earn them self bad name among people or bring the project down to earth.
now because it is possible to close that on minimum cost so they are willing to do that instead playing with buyers emotion later they have put the burden on them self.
I think by coming forward with all this they have done a good job so far unless they start under different banner later because hey you never know they can match the cost that way.
November 28th, 2007 at 9:34 am
“Also, pre-sale being for the stupid is a terrible outlook. Without buildings being pre-sold there is a high chance of them never being built. In the end everyone looses if demand is not being met with supply.”
No, if there is appropriate demand then the supply will come. The only thing pre-sales does is allow the builder to do completely substandard work, lease important parts of building infrastructure without putting it into the ‘estimated’ strata fee etc etc.
Pre-sales are a SCAM, they build 1 nice show suite beautifully well detailed and put disclaimers like ‘actual suite may not have the exact same things as the show suite’ knowing all along that they’re going to short the final product. It’s para-legal fraud.
November 28th, 2007 at 9:48 am
Why would anyone cancel a project if RE prices are only going UP, UP, UP!!!!! If prices are continuously rising into the stratosphere why wouldn’t the Elyse be totally sold out, why didn’t the financiers say “Well it’s a gamble but at least we can sell the units to recover our loan after they’ve appreciated 100%”? Your fifth grade education should enable you to answer this question, it’s not that difficult.
PS, As far as labour shortages go, there are many, many Mexican and US construction workers with no work just 20 minutes south of us. It isn’t that hard to get a visa for these guys to come up here, the job sites are already crawling with them. I call bullshit on that excuse.
November 28th, 2007 at 11:24 am
Congrats to BC for holding out the longest with Moscow and a few other places but in the end we are still on planet earth and worse….next door to the US and this will insure LOTS and LOTS of pain for those who entered this market in the last 2 (3) years
November 28th, 2007 at 11:38 am
November 28th, 2007 at 11:40 am
Owner or developers are intended to sell on current prices tony you are not reading the link construction cost is runing over more and more till the project will come to an end.
The outlook is for demand to continue to outpace supply, “leading construction costs to rise by an average of 10 per cent this year, 11 per cent in 2008 and nine per cent in 2009.”
Can you manage to read that with your education.
Now put your self in developers shoes and tell me if you can serve some one on great loss.
on otherside they can come back with different name to match the cost.
November 28th, 2007 at 11:49 am
Good Work !Chris hope you can pass that to Tony Danza(angry bear)
misanthropic curmudgeon,
I have heard some thing 26 week stuff.
presence of inventory does not effect the market.Units must get sold for less or more that’s what counts.
November 28th, 2007 at 11:49 am
Yes, I’m sure thats the reason. And clearly the banks are not very smart with investing so they wont finance this project which you so eloquently point out is nearly guaranteed to double in value in the next couple of years.
Sigh. Why don’t they teach basic economics in school?
November 28th, 2007 at 11:59 am
Too bad for the pre-sale buyers they could have flipped these for $100K before construction was 1/2 done…
November 28th, 2007 at 12:59 pm
My education taught me to read, it also taught me to read and think critically. I don’t believe everything I read SATV, but I do know that if those Elyse condos were as great a deal as you suggest that they would have been 100% sold out.
I also know that if the developer wanted to complete the project profitably he could have nullified the 55 contracts and resold them. The developer himself said the majority of the pre-sales were to individuals involved in the project , in other words there was no demand for the units at a price too low to profitably complete the project. Do you understand? The demand was from parties involved in the project, with money at stake in the project, no one else wanted these units.
BTW do you think this is the only developer who sells a large portion of pre-sales to those with interests in the project?
November 28th, 2007 at 1:01 pm
Then why didn’t the project sell out?
November 28th, 2007 at 1:16 pm
thumbsup is right. The developer does not have the luxury of re-pricing units after they are sold (some have tried and we know what happens…). What we haven’t seen yet is cancellations, followed soon after by free upgrades, dropping prices, and finally BK.
November 28th, 2007 at 1:33 pm
this is exactly what happened at the Elan, 1/3 of the units went to “insiders” and “friends of the developer”. they also got in at a lower per sq. ft. cost than the “sheeple” that bought at the open house when there was a “feeding frenzy”.
November 28th, 2007 at 1:36 pm
I think you mis-read. They had 2 projects worth $95M. A townhouse project was worth $30M meaning the other one is $65M. Whatever the number, they won’t be able to make money on it and it seems unlikely anyone else will be able to, unless they can somehow charge more for the units, secure better financing, or manage to buy the land at a discount.
Poor Eden is probably praying he can sell the land for at least what he paid for it. He’s not out of the woods yet!
November 28th, 2007 at 1:38 pm
WRONG! wishful thinking on your part, the demand in that area will not support high per sq. ft. prices.
the developer knows this, there is no “real” demand, the demand we are seeing is “speculative” and can disappear overnight as we are witnessing. stay tuned for more bad news satv!
November 28th, 2007 at 2:20 pm
Didn’t pre sales for this place start in February of this year? Surely he knew he could have charged $9,999,999,999,999.99 per unit?
November 28th, 2007 at 2:32 pm
I would argue that the real reason that he couldn’t proceed with the project is that he didn’t get the financing based on the crap sales. The cost of labour is just a way of squirming out of the project without tipping the “sheeple” and ruining demand for your other ongoing projects that have yet to sell out. FWIW this started happening in San Diego earlier this year, it’s all documented and analyzed to death on the US blogs.
November 28th, 2007 at 3:01 pm
According to some the Data mean that if the U.S. were any less important from an economic standpoint they would ALREADY be a “failed state” but as it stands the big owners of US debt are afraid to dump it because once they start to dump the value will go through the floor overnight (and before they can sell ALL of it).
November 28th, 2007 at 4:02 pm
stay tuned for more bad news satv!
Dow closes up 300 plus as stocks extend rally
Miss,
Am I tuned in to right station?
November 28th, 2007 at 4:03 pm
Yes I think you’re right. Note if he paid less for the land he would have had a better chance of securing financing. Land prices in that area are reasonably high. Looks like the squeeze is on for spec builders.
November 28th, 2007 at 4:29 pm
satv are you implying that the DOW being up 300 today has something to do with Vancouver real estate? What a waste of grey matter.
November 28th, 2007 at 4:33 pm
Do you understand TOTAL economic collapse? This is something that normally happens in banana republics. *IF* it were to happen in the US the result would be catastrophic for the Canadian economy.
Look at the ’scary graph’ I posted earlier, READ the accompanying article. I know there’s some big words in there but if you need help I can explain them to you. Do that, and come back here and tell me that things are fine down south and I’ll just write you off as hopelessly deluded.
November 28th, 2007 at 4:37 pm
“satv are you implying that the DOW being up 300 today has something to do with Vancouver real estate? What a waste of grey matter.”
No, it’s at least tangentially relevant, we can’t talk about US economic problems affecting Vancouver RE in a negative way and then ignore positive trends in the US economy.
That said, the DOW is about as linked to the reality of the US economy right now as the value of Vancouver RE is linked to local fundamentals right now.
November 28th, 2007 at 4:54 pm
Thanks Drachen,
Dow was on headlines on last thread me too surprise always.
but still I can comment little bit most of bear with 5-10k are in stock market,It is easy to scare them and when they them self pull out of market then they scream so loud and scare the market,so stock market is very shaky and its too often now.
You need a guts and at least 200k to get into r.e. so only bulls can do that that is why r.e. is more stronger worldwide.
November 28th, 2007 at 4:59 pm
Dow up 300 = santa claus rally
Van RE = buyers and speculators heading home, big bust coming up.
the RE market is screaming GET OUT!
are you listening?
November 28th, 2007 at 5:03 pm
could you post link to article related to scary graph?
thnx
November 28th, 2007 at 5:20 pm
Drachen,
Because of terrorism threat and natural disaster this is very difficult for me to disscuss future of usa.
other than that I can tell you they will be back on track end of 2008 or begining of 2009.
If they don’t have those 2 issue there is hardly anything to beat the juggrnaut.
For those same issue world choose that vancouver is a place to be.
I have checked out your article but no answer for the same reason. so what to disscuss?