In the past three years, the Rize Alliance tower proposed at Kingsway and Main Street was embroiled in a controversial battle over the building’s height.
A neighbourhood group opposed the 21-storey tower because it was far higher than anything in the area. It would cast shadows, create traffic problems and ruin the character of the Mount Pleasant neighbourhood, they argued. Last year, the group, called Residents Association Mount Pleasant, filed a B.C. Supreme Court petition against the City of Vancouver and the developer, alleging that plans for the multibuilding, 258-unit project at 285 E. 10th Ave. would look nothing like what the city had approved in 2012. It was one of two lawsuits filed by the non-profit group. Both cases were tossed out of court.
It turns out, none of the negative publicity affected presales of units at the Independent, as the project is known today. The site has been cleared to prepare for construction. The building that housed the presentation centre has been dismantled. Presales for the tower are 95-per-cent sold. Of those, 85 per cent were sold in the first month, according to the developer. In about two years, the tower will stand and the controversy will be a distant memory.
Developer Will Lin states his satisfaction plainly: “Well, we’re not in the news,” he says. “It’s good to finally get under way with what we intended to do on the project.”
Mr. Lin, whose previous developments include Metropolis in Yaletown, the Rolston and the revitalization of the Yale Pub, says he has tested the waters for the rest of the development community. But once sales got under way, he expected units to go quickly.
“I wasn’t surprised at all, because it’s a pretty pioneering location. It’s where east Vancouver meets the west side of Vancouver.”
Of the 235 units sold, he says more than 90 per cent were purchased by people with local addresses. He saw a lot of buyers from Vancouver, Burnaby, Richmond and the Fraser Valley.
“Out of them, I’d say 60 per cent were from the area, meaning within five to 10 blocks of the site.”
Investors purchased about 35 to 40 per cent of the units. None of them purchased units in bulk for short-term rental use, such as through Airbnb. Mr. Lin says the units sold before that kind of investor could get in.
About one-quarter of the units are two bedrooms or more, intended for families. Those larger units with the better views, priced at $500,000 and up, went before the cheaper ones. The townhouses also sold quickly. A 583-square-foot one-bedroom loft was priced at $392,900. The 1,581-square-foot penthouse two-bedroom is priced at $1,399,900. At the other end, studios started at $179,000.
The sale of condos in Vancouver is brisk business. There’s been a 40-per-cent increase in sales of apartment properties in the past two years, according to the Real Estate Board of Greater Vancouver. New units are an especially hot commodity. There have been a total of 1,134 one- to five-year-old units sold since the start of the year. That doesn’t count the all-important presales. There are about 80 presale condo developments in Vancouver proper, both currently listed and up-and-coming. If those developments average 100 units apiece, that could potentially add another 8,000 new units into the market. (That’s a rough number because the data isn’t readily available on presales.) By comparison, 3,142 condos older than five years have sold this year.
With the constant launch of new condos, how are the resale condos to compete? These days, it’s common for a condo resale to break even, if not sell for less than what the owner originally paid.
I asked Mr. Lin if all the new condos are hurting resale prices.
“Because they bought lower, they can afford to sell for lower,” Mr. Lin says.
He adds that the new condos are helpful to the resale market, not a hindrance.
“Having a new building come by at higher pricing makes your unit look good in comparison. It has a ripple effect.”
But a presale studio suite at the Independent is priced lower than a 42-year-old studio suite in a three-storey walk-up that is currently listed in the same neighbourhood, for $220,000. No wonder Vancouverites love their spanking new condos.
Real estate agent Bryan Yan, who sells houses and condos, says the market is much stronger for new condos.
“Most buyers like the hassle-free new or newer condos with warranties,” he says. “In Vancouver, Richmond and Burnaby, they’ve changed zoning on big streets to allow for condos and more density, so there’s a lot of supply coming up.
“I tend to stay away from older strata buildings because you’re competing against newer places now and more that are coming in the future, which is difficult. It’s hard for them to appreciate in price. And one must thoroughly go through the depreciation report, or it can be a money-pit nightmare.”
However, a condo owner who has owned for several years can still see a return.
Mr. Yan sold an 848-square-foot Kitsilano condo recently at 2555 W. 4th Ave. for $505,500. The asking was $528,000. It was 19 years old and in original condition. The owner had paid $280,000 in 2003.
“So, there is some return, but it’s lower and slower than the detached. A house on the east side bought at that time for, let’s say, $400,000 to $450,000, is now worth well over $1.2-million,” he said.
“One could have rented out the basement and could have financed the $120,000 to $170,000 difference [to buy the house instead of the condo]. It’s about the same down payment, but a $1-million return, compared to about $220,000. It’s a numbers game.”
When it comes to older condos, he advises clients to steer clear in most cases.
The exception is an older condo with a water view, in Kitsilano, downtown or Coal Harbour, he says.
“But basically, I don’t recommend buying the older apartments unless one is renting and can’t afford anything else.”
But agent Ian Watt argues that buyers are so obsessed with new builds that they’re missing out.
“In downtown Vancouver, there are tons of amazing units being overlooked because Vancouverites have been brainwashed that a presale is the way to go,” he says. “A prime example is Vancouver House, wedged between two bridges. This overhyped and overpriced development is selling for well over what it should be, by about $200 per square foot more, and it’s certainly way pricier than its marina-side equivalents.
“Another area that’s completely overlooked is west of Denman,” adds Mr. Watt. “There are some amazing units, with amazing views. But they lack the newness factor of Yaletown.”
Buyers shouldn’t be too quick to dismiss the old buildings, however. The older condos have a lot going for them, which is why they’re currently in big demand in that other Canadian hot market – Toronto. They’re often much bigger than new condos, they are usually centrally located, they’ve often had maintenance upgrades to last several more years and the long-time strata councils have built up a hefty contingency fund for future maintenance. As well, because they’re overlooked for the new units, they offer decent value. Once you update the kitchen and bathroom, you could be sitting with a spacious, central and more affordable home.
As for an investment, it’s probably only a matter of time until Vancouver catches up to Toronto’s current love affair with the old condo.