Testing times for Toronto’s pre-sold condos
It’s a worrying time for Toronto’s Condo market, as rising prices are pushing many condo developers to walk away from pre-sold projects. Condo values have soared in the city, increasing around 20% since last February according to the Canadian Real Estate Association.
The rising demand for condos has been put down to a booming economy and strong immigration, but despite this, many developers can’t afford to go through with plans set out for new builds just a few years ago. In fact, since the beginning of last year 17 projects, a collective 3,627 units, have been cancelled in the region according to research by Altus Group Ltd. Thats ten more projects than in 2016, where just 808 pre-sold units were cancelled.
The statistics arrive just a week after yet another sold-out development was cancelled. It was lights out for the three-tower Cosmos Condominium building, set for Vaughn, after Liberty Development Corp sited financial problems. The complex near the new Vaughan Metropolitan Centre TTC station outlined plans for 396 units over 36 storeys, and was to be fully completed by 2020 but move-in ready by next year. Now, the threat of more cancellations looms over the GTA, as developers are now expected to gather up to 70% of financing before moving forward with their plans.
“Many projects launched for pre-sales prior to having their proper approvals in place,” Shaun Hildebrand, a senior vice-president at Urbanation Inc, told the Toronto Star. “By rushing to bring units into a hot market, some projects jumped the gun and added risk to the development.”
The Toronto region currently has 412 condo projects, creating 101,208 living spaces for residents, underway. According to Altus’ data, as of February 143 projects that are at least 70% pre-sold haven’t started construction yet. Interesting, 43 of these hit the 70% financing mark more than a year earlier, which begs the question: why hasn’t construction commenced? David Schoonjans, senior director for Altus, is pointing the finger at rising labour costs and increased wages, “At some point, the project stops making financial sense.” Despite this, the demand for new builds in the city continues to climb, a positive nod to the future of condominiums in the GTA.