Photo: Castlepoint Numa
Toronto can’t stop talking about the cancellation of the much-anticipated Museum FLTS. condo development. The 168-unit Castlepoint Numa project was called off in late October, leaving purchasers high and dry.
There’s also rumour that the cancellation is a case of the developer looking to sell the units at a higher price, now that condo prices are booming.
But the cancellation isn’t the sign of worse things to come for Toronto’s preconstruction condo market. At least, Fortress Real Developments senior VP Ben Myers doesn’t think so.
“In the grand scheme of things, the number of condo developments that get cancelled is still relatively low,” Myers tells BuzzBuzzNews.
According to data from the Altus Group, there have been 532 new condo launches in the GTA since January 2013. Of those, only 35 projects, or 7 per cent, have been cancelled.
“When you look at the time period between 2010 and 2013, there was a 12 per cent cancellation rate,” says Myers. “It’s higher, but still relatively marginal.”
Myers says condo cancellations can be attributed to a number of factors, including a developer choosing to go to market before securing the necessary approvals, or a poorly designed project.
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“Often it’s projects where the developer clearly didn’t invest in a good market study, so the suite-mix will be wrong, or the pricing will be off,” says Myers.
When it comes to the fate of cancelled condo developments, Altus Group data shows that of 122 cancelled projects from 2003 to 2012 in the GTA, 28 per cent where re-launched and completed by the same developer, while 19 per cent were built and completed by a new developer.
An additional 10 per cent are still under construction from the same developer, and 10 per cent are still under construction from a new developer.
“So 70 per cent of the developments were eventually built or under construction after being cancelled,” Myers writes in a blog post. “Good real estate typically remains good real estate. Bad market timing, poorly priced or designed projects often need a reboot with a new strategy. The majority of sites have come back in a new form have been successful the second time around.”