“Ritz-Carlton Residences on West Georgia in downtown Vancouver stopped all excavation work.”
The excavation is about 60% completed when everyone is told to stop work and leave. All signage advertising the Residences at Ritz-Carlton have been removed from the site scaffolding and all construction trailers have been removed. The developer is saying that this is not due to any credit market problems (as we’ve seen in a number of other lower mainland condo developments). Although sales have been slow, financing is in place and there are enough presales to move ahead with the construction. Since they are going to be doing some ‘modifications to the design’, there’s no point in having work going ahead or having the presentation sales center open until the modifications are done.
The excavation is about 60% completed when everyone is told to stop work and leave. All signage advertising the Residences at Ritz-Carlton have been removed from the site scaffolding and all construction trailers have been removed. The developer is saying that this is not due to any credit market problems (as we’ve seen in a number of other lower mainland condo developments). Although sales have been slow, financing is in place and there are enough presales to move ahead with the construction. Since they are going to be doing some ‘modifications to the design’, there’s no point in having work going ahead or having the presentation sales center open until the modifications are done.
Question is - Do you believe them?
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Due to the panic which has dropped downward pressure on financial markets, a sense of emergency has emanated. While the governments are working expeditiously to restore the disappearing market confidence, their efforts have been mostly otiose. The few rebounds have been nothing more than an opportunity for people to unload their position and is little indication of a recovery.
I turn my attention to the local Canadian real estate market which has been holding up since market declined towards market stagnation dating back to January 2008. However, the optimism that seemed to have supported the hold-up dissipated in September when Lehman collapsed. Hit especially hard are those who have employed high leverage in an attempt to flip for a profit while the real estate market was red hot.
There were many developers who have invested heavily in home or office constructions with completion in 2008 to 2010. They are now stuck in a dilemma – on one hand, the construction costs have escalated to erase any potential profits and may even cause them to incur losses; on the other, the longer they drag it on, the more their long term liabilities will accumulate. To make matters worse, the banks are tightening their loan requirements making it very difficult to get construction loans.
For the investors, they are witnessing properties listed for several months without any market interest. Those who had originally laid the deposit for pre-sale units would rather choose to default, returning the problems back to the hands of the developers.
While the statistical numbers reported by the Canadian government has not shown any serious cause for concern, take note that their reporting cycle is always almost a quarter or two late. It is fair more accurate to get a feel of the market through direct observation.
But I can tell you now. The Canadian real estate market is already in recession with the worst yet to come.
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If you are interested in doing research on condos, Condo-Advisory is a new site with plenty of reviews, rates and so forth. They may be lacking in pictures at the moment, but is expected to upload them soon.
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