The tough economy takes its toll on B.C condo developments.
(Source: Vancouver Sun)
VANCOUVER — The number of real estate sales may have bounced back in March compared to February, but they are still well below levels of a year ago, and so are prices. What is clearly up, however, is the number of condominium developers seeking creditor protection or going into receivership.
Most of the developments follow the same pattern. The developer runs out of money, the lender goes to court and has a receiver appointed and the receiver finishes the building and gets the best price it can for the units. Others seek creditor protection, asking the court for time to get their financial houses in order before the lender comes knocking.
Many developers got into trouble when credit markets seized up in 2008, said Larry Prentice, senior vice-president at Ernst & Young Inc., which is acting as receiver for the Resort at Copper Point in Invermere.
Money just wasn’t available, or those who had money were being choosier about who they lent to, he said. And some developers “were reliant on there being more money to keep it afloat.”
The Sophia condominium project on East 11th Avenue in Vancouver was pushed into bankruptcy when cost overruns of $4 million meant the pre-sale prices asked when the units were marketed in 2005 and 2006 — between $364,000 and $689,000 — wouldn’t cover costs. When the Bowra Group stepped in, purchasers were given two options: pay more for their units or get their deposits back. About half chose to stay, half chose to go, Bowra said.
And more opportunities are just around the corner with a number of developments in receivership just a few months from completion, including the Mountaineer in Squamish and the Amadeo in New Westminster.
Read Fiona Anderson’s full article “Rising number of Vancouver Condo Developers feel the pinch” in the Vancouver Sun (April 5, 2009).