‘The trend is starting now’: Bulk sales of unsold condos coming to Vancouver
The Newest wrinkle in real estate is selling multiple units to investors in projects. It’s a trend that has taken off in Toronto
By John Mackie
Last updated 10 hours ago
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Commercial real estate broker Mark Goodman’s phone started ringing off the hook almost immediately Tuesday morning after he posted a new listing in his newsletter — a “rare opportunity” to buy up to 30 units in a single six-storey building in Surrey Centre.
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“It was like a bomb just went off in my office, and we’re guns blazing right now,” he said. “I’ve had 23 calls and e-mails in the last hour from investors and some other developers, just wanting to know what’s going on.”
Selling new condo units in bulk to investors has been happening for some time in Toronto, and has now emerged in Metro Vancouver. The concept may appeal to developers with slow sales, or investors who can afford to rent the condos out for a few years and sell them when the market is better.
Goodman declined to give the name or address of the project because of “confidentiality” with the anonymous developer.
“They don’t want to spook some of the existing investors,” said Goodman, principal broker at Goodman Commercial, which specializes in “land and rental apartment building sales.”
The listing says the project is a “high-quality, six-storey wood-frame building” by an “award-winning Metro Vancouver developer.” The building has approximately 100 units.
“I would say that you’re going to see a lot of these 100-unit projects that need our assistance,” he said. “How many? I don’t have that exact number, because the trend is starting now.”
He wouldn’t give exact prices, but said discounts on large bulk buys such as this would be “certainly north of 10 per cent” from the “retail rate,” which is currently about $900 per square foot in the building’s central Surrey location.
Greg Appelt of Appelt Properties in Toronto said bulk sales have become popular in that city, which has a large surplus of unsold condos.
“Condo prices have nose-dived,” he said. “You’re getting a whole bunch of condos coming onto the market all at the same time, and people aren’t closing on them. The developers, they’ve got to sell and turn over their inventory.”
According to a recent Financial Post story, real estate and consulting firm Urbanation estimates “there are 4,000 newly completed condominiums unsold in the (Greater Toronto Area), with another 3,000 units in limbo after presale buyers failed to close.”
In Metro Vancouver, Goodman says, there are currently 4,000 unsold units throughout the region.
Appelt said the condo market is suffering because the investor market has dried up.
“Fifty per cent of that end-buyer was investors, and 50 per cent were end-users,” he said. “And now that investor pool is gone. It’s just not economic, so they’re not buying.”
Goodman said the Vancouver condo market is undergoing a “complete reset,” but he anticipated it will rebound in a few years. He is hoping for bulk buyers who can afford to rent a property for a few years, then sell it when the market rebounds.
“If you believe, which most people do, we have a supply-demand imbalance right now,” he said. “We have so much supply that it has driven prices down, (and) construction has literally stopped. All the data indicates that we are going to hit what I call a vertical supply wall approaching 2028-29.
“Completions are expected to drop sharply. As a result, this historic pricing that we are seeing today is going to reverse quickly.”
Instead of a melt-down, it is going to be the “craziest melt-up that we’ve ever seen.”
He also said there may be much bigger bulk sales on the horizon. He fielded a couple of phone calls from large real estate investment trusts on Tuesday.
“One of them has picked up three projects in Toronto, massive blocks, well more than 30, and they’re looking for their first B.C. acquisition,” he said.
“I’ve been on the phone with developers all day wanting us to help them with projects. Some projects are sitting with 50 per cent standing inventory. If it’s a 200-unit building, that’s a 100-unit block (of unsold condos).”
— with files from Joanne Lee-Young
