Whether it was moving launches completely online or reworking development messaging, marketers sparked change and innovation in the new construction condo industry throughout the first year of the pandemic. While progress has been made, new challenges could still be on the horizon for the new construction condo market in 2021.
In its most recent market report, the Toronto Regional Real Estate Board (TRREB) forecast that rising resale condo inventory, a softened rental market and short-term rental restrictions could dampen new construction housing demand in 2021. The report also noted that the City of Toronto saw a year-over-year drop in new condo sales in 2020.
Behind the scenes, marketers and strategists are working to confront these issues in 2021, while the effects of the pandemic are likely to continue influencing investor decisions, market trends and development launches.
Rich Kuypers, Chief Marketing Officer at The Condo Store Group of Companies (TCS), explains that new construction investors and firms understand that the situation in the market is short-term, based on available data. Whenever the world is ready, real estate market activity is expected to revert back to its normal growth curve, he says.
“Markets will smooth out at their own pace, but in the case of a world-class urban city like Toronto, it’s not about trying to time the market — it’s about getting into the market with a smart investment strategy that is driven with factual analysis rather than a glossy broker marketing brochure,” said Kuypers.
The GTA is also experiencing a high level of condo completions. More condo units were completed in 2020 than 2019, according to TRREB’s report up construction in 2020. This is adding to the already elevated condo resale inventory and moderating conditions for price growth in the first half of 2021, the report explains. Faced with this environment, Kuypers says that new condo marketers must adapt to the situation and strategize accordingly.
“If there is some amount of time where there is an abundance of availability, then the marketers in the industry will have to adjust and be more flexible, and even potentially get creative with incentives, or they don’t and they wait for what comes next,” he said.
When the first lockdowns were imposed across the country in the spring of 2020, a number of condo developers postponed their launches. When immediate market conditions are uncertain, Kuypers says the best way for marketers to help their investor clients make the right decisions is by focusing on quality product and long-term prospects. It’s about being informed and not making a snap decision based on conditions that won’t exist in the long run, he explains.
“Therefore, it matters less about a project being moved up a year or back a year, it’s about the long-term potential and what factors will drive the market in the years to come,” said Kuypers.
“That is what the messaging should be saying, but not all the players in our space guide their clients with the long-term investment strategy in mind. I’m proud to say at TCS, we do,” he added.
In the development marketing world, Kuypers believes that some processes and best practices will remain the same as they were pre-pandemic, while other behaviours that companies adapted to during the pandemic will stick around. COVID-19 has pushed the real estate sector to be more open-minded to different methods of communication, such as the use of virtual presentations in lieu of in-person events. Future changes to other segments of the industry could come about as a result of the pandemic too, he says, such as the integration of property technology during the house hunting process.
“The real estate space is historically slow to adapt and change, at least from a process or operations standpoint,” said Kuypers. “With this, if you can truly cut through and differentiate, it can have an exponentially positive effect for your firm.”