Time to cut our losses on Olympic Village?

The City of Vancouver still owes lots of money for the Olympic Village condo development.

They aren’t saying how much but it looks like it’s currently at least a couple hundred million.

Is it time to cut our losses?

Developer Michael Geller thinks so. In this Province article he says it’s time to cut the prices and get out while we can.

As Vancouver’s real estate market cools, losses on the troubled Olympic Village development could soar above $225-million unless condo king Bob Rennie quickly drops prices on unsold units that have languished on the market for too long.

That’s the view of developer and architect Michael Geller, a former NPA council candidate, who suggests flawed pricing and weak marketing is turning the fiasco on False Creek from bad to worse.

Read the full article here.

What do you think? Does the city stand to lose more by holding out for ‘maximum price’ or by selling quickly at a discount?

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LS
Guest
LS

This is not very difficult question to answer. City should sell it right now and don´t expect for the next price fall. As the last data suggest, there will be more price reduction and moderation (Vancouver Housing Market: Developments in 2012).
The boat is sinking and there is no good future ahead. Hence it is much better to start selling it right no to those who still believe real estate market in Vancouver is a good place to invest money.

Not too happy
Guest
Not too happy

With regards to ‘Yu Living’ green condo at UBC south campus, my in-laws in China bought a place site unseen. They are furious now that the view overlooks a future BC Liqour store and Save on Foods. The agent in China was caught off guard as well – the brochure showed a trees and ocean!!!

They should not bought a place with so little advance research; they come from a generation that respected universities and assumed that they were buying into a quality life style for future grand kids.

registered
Member
registered

“…they come from a generation that respected universities and assumed that they were buying into a quality life style for future grand kids.”

They weren’t suspicious that a university selling off land wholesale to them for short-term profits would do same for others? Their surprise is surprising.

Re: the Village, maybe they can offset the losses with profits from re-roofing BC Place.

patriotz
Member

“The agent in China was caught off guard as well – the brochure showed a trees and ocean!!!”

Shocking to think UBC would give the impression that they are near trees and the ocean.

Maybe your inlaws should stick to fake English villages.

joe_blown_away_by_high_housing_costs
Guest
joe_blown_away_by_high_housing_costs
“The problem with arm chair gossip that the Michael Gellers of the world have, is they don’t sit in the board room with the decision makers and the stake holders” Bob Rennie likes to point out his inside connections with big powerbrokers in real estate. I seem to remember another interview in which he talks about being in the board room. I think Rennie is a narcissist. “In an interview, Rennie blasted Geller, saying the former NPA candidate is politically motivated and his views are harmful to the city’s efforts to repay its loan. Rennie suggested Geller has “lost all credibility” and has no idea what he’s talking about.” Geller may be politically motivated. But does that make Rennie a bastion of impartiality. Doesn’t Rennie’s connections to the big whigs he likes to talk about so much create biases for… Read more »
joe_blown_away_by_high_housing_costs
Guest
joe_blown_away_by_high_housing_costs

This public spat between Bob Rennie and Michael Geller indicates to me that the bubble has popped. Before the bubble popped these guys would have been on the same page. They are both real estate developers and they care most about making money as opposed to other concerns like healthy community development and affordable rental housing for local people. The fact that two of Vancouver’s most prominent real estate developers are having a public argument and trading personal insults in the pages of The Province indicates to me that the bubble has popped.

joe_blown_away_by_high_housing_costs
Guest
joe_blown_away_by_high_housing_costs

Would Vancouver be considered an equity-drive property market or a mortgage-driven property market?

“Barclays Capital in a new report classifies Hong Kong as an equity- driven — rather than a mortgage-driven — property market, where we need to think of apartments more like a “deposit box” to hold wealth, rather than homes for people.

To support this contrarian analysis, they point to a reduction in leverage in the overall market and a decline in owner-occupants.The 2011 census revealed 60% of owners have no mortgage on their property, up from 48.5% a decade earlier. Owner-occupation rates have also dropped from 73% in 2006 to 70% in 2007, says Barclays, as cash-rich investors price genuine homeowners out of the market.

This description certainly fits the behavior of the recent influx of buyers from mainland China, who often leave apartments empty rather than rent them.”

http://www.marketwatch.com/story/new-records-for-hong-kong-real-estate-2012-08-26?siteid=bigcharts&dist=bigcharts

Anonymous
Guest
Anonymous

China Confronts Mounting Piles of Unsold Goods

“GUANGZHOU, China — After three decades of torrid growth, China is encountering an unfamiliar problem with its newly struggling economy: a huge buildup of unsold goods that is cluttering shop floors, clogging car dealerships and filling factory warehouses.”

http://www.nytimes.com/2012/08/24/business/global/chinas-economy-besieged-by-buildup-of-unsold-goods.html

jesse
Member

@joe_blown_away_by_high_housing_costs: Rennie’s angry just as he was about Robertson talking about the “Village” in a negative way in the media. Robertson was told to STFU and let the salespeople do their job.

Now Geller has called a spade a spade and mentioned the unmentionable: dropping the price. That goes against all that marketers know to be true — only drop the price after all other measures have failed, a Hail-Mary pass out of a looming bankruptcy. Geller, an architect, doesn’t always give a sh!t about sales techniques. He just ran the numbers.

Anonymous
Guest
Anonymous

“losses on the troubled Olympic Village development could soar above $225-million unless condo king Bob Rennie quickly drops prices on unsold units”

Like it is Rennie’s decision to make. He is just the broker not the developer or owner. The City council calls the shots. Rennie can only advise and we really don’t know what he is advising because the council may not be following his advice.

If Geller was taking political pot shots he would have directed them at the politicians such as the Mayor not Rennie. Geller clearly does not like Rennie though because he is blaming the poor sales on him when really it is the councils fault for not dropping prices. Marketing brochures can only get you so far.

Anonymous
Guest
Anonymous

@jesse: “Now Geller has called a spade a spade and mentioned the unmentionable: dropping the price. That goes against all that marketers know to be true”

You could not have got that second part more wrong. The marketers most important job is convincing those who make the decisions on price to set the price correctly. One reason Rennie has been successful is because he has been able to do this with developers. Most successful real estate sales take place when the price is set not all the stuff that happens after.

Apocarypse Now
Guest
Apocarypse Now

@Not too happy:

Having amenities and shopping nearby, like a good grocery store within walking distance, is part of a quality lifestyle for Canadians who want to live in higher density. It’s almost a necessity to have these things. Developers plan these into their projects as a benefit, and planning depts would require them anyway. It’s called creating a neighbourhood. Seems like your in-laws want to move to Canada without living a Canadian lifestyle. Perhaps they would have preferred a walled gated community? Wouldn’t have to mix with the locals at the grocer.

registered
Member
registered

@11 Anonymous Says: “… most important job is convincing those who make the decisions…”

This may be only risk of empathy for Mr. Opportunist. His clients are the same nitwits who penciled the original agreement, changed Leeds certification mid-project throwing it into chaos and were the primary architects of the near-impossible; an unsaleable Vancouver waterfront condo on an exclusive lot at the height of an unprecedented property bubble. On the plus side, those are his clients.

Used House Salesperson
Guest
Used House Salesperson

I’d be willing to bet that Rennie would love to drop prices and is likely arguing for that move privately. Rennie gets his cash from marketing, I bet he’d love to get those condos dumped and move on.

It must be pretty embarrassing for the ‘condo king’ to not be able to move these waterfront units YEARS after they came up for sale.

He’s in the weird position of arguing publicly against price drops because too much mention of that possibility could scare off the few suckers left willing and able to pay a premium for this albatross.

jesse
Member

@Anonymous: “One reason Rennie has been successful is because he has been able to do this with developers”

Why, then, are sales so slow at the Village? Sounds to me like Rennie’s magical price-setting abilities are stuck a rut, at least for the less-desirable units. Geller’s point was, look dudes these units are less desirable and you’re trying to primp them up into something they’re not. Just drop the price and be done with it, and let’s move one.

For Rennie to drop the price is the ultimate defeat. It means all the other notes and strokes used in the Art of Persuasion have failed.

N
Guest
N

Vancouver home prices continue to rise in second quarter
Housing affordability declines nationwide

http://www.vancouversun.com/business/real-estate/Vancouver+home+prices+continue+rise+second+quarter/7150541/story.html

Vote Down The Facts
Guest
Vote Down The Facts

@jesse: “For Rennie to drop the price is the ultimate defeat. It means all the other notes and strokes used in the Art of Persuasion have failed.”

I cannot comprehend how the free kayak didn’t work.

Anonymous
Guest
Anonymous

China announces £800bn stimulus to boost confidence

“China has announced a total of 8 trillion yuan (£800bn) of “stimulus projects” to try to boost confidence in an economy that appears to be cooling faster than expected.”

http://www.telegraph.co.uk/finance/china-business/9500548/China-announces-800bn-stimulus-to-boost-confidence.html

gokou3
Guest
gokou3

But… but.. Mr. Rennie, if prices were right, why wasn’t it sold out after 2+ years? There certainly weren’t a lack of buyers, as demonstrated by Marine Gateway which sold out in one day. [/sarc]

rp1
Guest
rp1
rp1
Guest
rp1
Bag it and tag it
Guest
Bag it and tag it

@N: “Vancouver home prices continue to rise in second quarter”
When even the rigged benchmark is no longer showing price increases, the solution is simple….print price increase headlines using months old data!

ScubaSteve
Member
ScubaSteve

Cities CAN go bankrupt. I think Vancouver, at very minimum, will lose its AAA credit rating over this. Once that happens, I could see a downward spiral. Greggors only knows how to spend money, not to save it.

FlipFlop
Guest
FlipFlop

I think part of the problem is they realize just how far prices have to drop for these units to sell.

A friend of mine is living in a 2BR unit that’s been foreclosed on, and there’e still pretty tepid interest at 629,000 (after 3 price drops; sounds like $599 is close).

Identical unit a floor above is till priced at $849 from the developer.

That’s a serious haircut to get units moving.

gokou3
Guest
gokou3

@ScubaSteve: and only spending money on bike lanes, not much else!

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