condo market Calgary

[piggy]

Just thought I would throw this out there , if anyone has any comments much appreciated.

I watched Don today on BNN-always catch an interview with Don-very informative...Thanks Don !

He mentioned some concern over the Toronto and Vancouver condo markets due to unabsorbed units increasing around 2010.

What I have to question is the Calgary condo market going forward?? My understanding is there is quite a few projects to be completed over the next few years, and the market is a buyers market.

 

[RedlineBrett]

Hi there,

definitely a buyer`s market, but rents are still strong (for now) in this area.

There are lots of towers going up and I would venture a guess that between 1/3 to 1/2 of these units will end up being rented out. Prices will decrease some more in this market.

There is also lots of supply from condo conversions (old apmt buildings turned into condos) which have saturated the market.

However, that being said there is also A LOT of commercial space being added... and from what I`ve been hearing these are nearly all pre-leased and have large commercial tenants already in place. That means JOBS coming to this area which will help fuel demand. But it will take YEARS for all of this to work its way through.

So, short term no you won`t make any money and rents will DECREASE in the DT and I would STAY AWAY from new buildings for now.

QUOTE (piggy @ Sep 30 2008, 09:21 PM) Just thought I would throw this out there , if anyone has any comments much appreciated.

I watched Don today on BNN-always catch an interview with Don-very informative...Thanks Don !

He mentioned some concern over the Toronto and Vancouver condo markets due to unabsorbed units increasing around 2010.

What I have to question is the Calgary condo market going forward?? My understanding is there is quite a few projects to be completed over the next few years, and the market is a buyers market.

 

[RedlineBrett]

I should add a quick note here... there is one market segment that I think will see a benefit from all of the new buildings coming up in the DT... and that is OLD condo buildings that need a bit of refurbishment. The lure of new product is that it is more modern and stylish. Condos can be renovated and completely remodeled for pretty cheap... much less than a detached home.

These old condo buildings have generally been OWNER OCCUPIED for their entire lifespan so they are in much better shape than converted apartment building product. Also, with old condo buildings comes LOTS of info in the documents so you really know what you are buying into. (contrast this with the idea of buying a new building that was built during an incredibly competative time for construction labour + materials and you get NO history!) Lastly the older buildings generally have a warmer and more homely feel because there are much fewer occupants than the newer buildings.

Sooo... In my opinion there is some money to be made by picking up old units in good locations on the cheap (like right now) holding for cashflow (can breakeven at least in some buildings right now) and then putting some money into them and marketing them as a cheaper alternative to newer buildings (with a BETTER location and the SAME size) when the next demand cycle comes.

There is also the notion of `replacement cost evaluation` What this means is that if developers are all spending 100`s of millions of dollars to put up these new buildings then by virtue of higher construction and labour costs the old buildings have increased in value given how much it would cost to build them again right now. Buyer`s don`t care about this evaluation method but as an owner it is nice to know that they couldn`t rebuild your unit right where it is without spending 1.5x as much as it cost you to buy it.


QUOTE (RedlineBrett @ Oct 1 2008, 08:44 AM) Hi there,

definitely a buyer`s market, but rents are still strong (for now) in this area.

There are lots of towers going up and I would venture a guess that between 1/3 to 1/2 of these units will end up being rented out. Prices will decrease some more in this market.

There is also lots of supply from condo conversions (old apmt buildings turned into condos) which have saturated the market.

However, that being said there is also A LOT of commercial space being added... and from what I`ve been hearing these are nearly all pre-leased and have large commercial tenants already in place. That means JOBS coming to this area which will help fuel demand. But it will take YEARS for all of this to work its way through.

So, short term no you won`t make any money and rents will DECREASE in the DT and I would STAY AWAY from new buildings for now.

 

[Thomas Beyer]

QUOTE (piggy @ Sep 30 2008, 09:21 PM) He mentioned some concern over the Toronto and Vancouver condo markets due to unabsorbed units increasing around 2010.

What I have to question is the Calgary condo market going forward?? My understanding is there is quite a few projects to be completed over the next few years, and the market is a buyers market.

yes, this is a concern right now .. and this is why some condo projects have been canceled ..

This means now is a great time to bargain and get discounts, as 2-3 years from now there will likely be a shortage of supply and guess what: huge price increases again !

Markets seem to have a way to correct themselves !

 

[Jack]

I actually think there are some pretty good buys right now in the downtown & Connaught areas.

There`s a TON of supply, especially in Connaught, which would lead one to think that some motivated vendors are out there. Rents may come down a little bit, but not much; mine haven`t, YOY, and I`ve still got the same excellent tenants.

Tenant profile for downtown dwellers is also generally pretty good; they tend to either work downtown and earn a stable salary, or they`re college students wanting close access to the nightlife and the C-Train.

The one thing I will caution you about what Brett said, with respect to older buildings, is that, yes, the ability to modernize & increase perceived value fairly quickly & relatively inexpensively is usually there, BUT, the condo fees tend to be very high, which obviously isn`t ideal for the long-term, cash-conscious investor. My condo fees in my 2006 development are $266/mo., which cover all utilities, and it`s a 2-bedroom; contrast that to a 2-bedroom from a building built 20 - 25 years ago, and you can add about $200/mo. to that value.

Anyway, in my opinion, the DT/beltline area of Calgary is a solid place to invest.