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Old 11-03-2010, 11:10 AM   #1
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Thoughts.... anyone on CP get in on this action?

CALGARY - Three years ago during the peak of the housing market Calgarians lined up to purchase condominiums at projects that had not even dug a hole in the ground yet.

This past weekend it was a case of deja vu as condo mania swept through the sales centre at the University City project planned for the Brentwood LRT Station.

In a matter of days, Phase 1 of the project, a 216-unit, 18-storey residential tower, has completely sold out. As of Tuesday mid afternoon, only 48 units were available in Phase 2, another 216-residence, 18-storey tower.

"It was madness. It was really busy, really busy," said Jennifer Carter, sales manager for the project, of the weekend activity. "I wasn't expecting it to be that busy. I didn't expect us to sell out either the first day."

She said buyers included students, parents purchasing for their children, people who work at the University of Calgary and Foothills Hospital, and some investors.

Cory Fisk was one of those buyers on Sunday and said he was shocked at how quickly units were being scooped up. He purchased a two-bedroom unit in Phase 2.

"It's a couple of years from now which I'm quite happy with. The main reason I looked at it was my son will be graduating high school in a couple of years and the location is perfect for a university kid," he said.

"And the price of course was phenomenal. You've got everything you need. The shopping's right there. The LRT is right there. The university is right there. And if he decides to go somewhere else to school I've got a place I can rent."

The University City project, a master-planned new community located across from the University of Calgary at the Brentwood LRT Station, will eventually consist of five buildings with a total of 600 to 700 residences.

The first building will be ready for occupancy about late December 2012.

Phase 1 and Phase 2 of the project will be 18-storey towers followed by 12 and 14-storey towers in Phase 3 and Phase 4, and four storeys in Phase 5.

Studio units are priced from $159,900; one bedroom units from $175,900; and two bedroom units from $189,900.

The project is being developed by Metropia, Knightsbridge Homes Ltd., and RioCan.

Ironically, the condo frenzy comes at the same time the resale condo market took a dive last month with weak sales. In October there was only 310 MLS transactions - the lowest level for the month since 1999, when only 308 condos sold. The average price was $287,793, down slightly from October 2009's $289,155 average on 601 sales.

But the selling activity of the last few days at University City calls to mind similar scenarios played out in the city a few years ago.

In June 2007, 40 luxury condos sold in one day at the Le Germain Calgary mixed-used development in the heart of the downtown just across the street from the Calgary Tower. Prices ranged from $840,000 to $3.5 million.

A few months later in September, the Waterfront condo project in Eau Claire had its first phase of development virtually sell out one weekend. The project, situated near the Bow River along Riverfront Avenue just east of the Eau Claire Market, saw strong interest for its 170-plus residential unit tower. Prices ranged at that time from the mid to high $300,000 to $1 million.

University City is considered a Transit Oriented Development with the City of Calgary.

Kevin Barton, a senior planner with land use, planning and policy for the city, said the idea is to concentrate housing and jobs as close as possible to an LRT station.

The intensity in terms of the amount of housing and jobs will vary from station to station.

"Brentwood probably for northwest Calgary would probably have the most density for jobs and housing," said Barton. "On the south line, Chinook and Anderson would probably be our highest density TOD sites on the south leg.

"The TOD areas are like mini downtowns that will be strung along the LRT lines."

Although condo sales have been moderating in Calgary, some projects will sell quicker than others, said Richard Cho, senior market analyst in Calgary for Canada Mortgage and Housing Corp.

"Projects that are competitively priced, close to the LRT or major bus routes, and close to amenities will attract prospective buyers," he said. "In addition, units that are close to any major institutions or downtown will typically attract investors looking to rent the units out."

As of September, there were 976 condo apartment starts so far this year in Calgary compared with 184 for the same period a year ago.

The number of complete and unoccupied units in September was 707, up from 342 units in September 2009, said Cho.

mtoneguzzi@calgaryherald.com

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Old 11-03-2010, 11:14 AM   #2
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Whats the over/under that the project runs out of money during construction? I guess I'm amazed they can sell units for so cheap when other developers were running out of money.
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Old 11-03-2010, 11:27 AM   #3
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^^ This is exactly what I would be worried of.
I personally think its to large of a risk to purchase a brand new condo that has not been built. I would want the place to have been around for a few years and have a much better idea on the financials and reserve fund.
And to answer your question I have no clue, this complex is not working with realtors (and why would they if they can sell out in 1 day lol) so i havent been to up to date with news releases.
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Old 11-03-2010, 12:45 PM   #4
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Apparently the backers of the University City project can build the thing with their pocket change. So it may be a completely different beast than Midtown/Skytower/Union Square v1.0 and all the others that priced too low to start.
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Old 11-03-2010, 12:48 PM   #5
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I *REALLY* wanted to invest in one of these units, but the wife wasn't interested :-(

I guess we'll see how it turns out.
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Old 11-03-2010, 12:50 PM   #6
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Quote:
Originally Posted by K1LLswitch View Post
I *REALLY* wanted to invest in one of these units, but the wife wasn't interested :-(

I guess we'll see how it turns out.
There will still be plenty of opportunities to get in.
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Old 11-03-2010, 12:56 PM   #7
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This was only 2 of 5 towers that will be built as part of University City. Not too mention all the other condo/townhome developments that will be part of the Brentwood Station TOD area.
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Old 11-03-2010, 01:10 PM   #8
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Originally Posted by Bigtime View Post
Apparently the backers of the University City project can build the thing with their pocket change. So it may be a completely different beast than Midtown/Skytower/Union Square v1.0 and all the others that priced too low to start.
People say that, but if the economics dont stack up they'll pull the funding on any project, regardless whos backing it.
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Old 11-03-2010, 01:18 PM   #9
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Quote:
Originally Posted by Bigtime View Post
Apparently the backers of the University City project can build the thing with their pocket change. So it may be a completely different beast than Midtown/Skytower/Union Square v1.0 and all the others that priced too low to start.
Their personal wealth has nothing to do with it unless they are self-financing it. Even if they are, would they eat the cost if they're priced too low and have underestimated their budget? Or would they pass that cost back to buyers?

Buyers should be asking about the developer's financing requirements for construction.
Are they using lenders?
How many sales are required by the lenders before construction starts?
What down payment do their lenders need to see in contracts to finance the development?
How are they financing with such small deposits?

Unfortunately, people don't ask enough of the right questions or use a qualified Realtor who is experienced with pre-construction. They just see a big line, and small down-payment and jump in.

Quote:
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I personally think its to large of a risk to purchase a brand new condo that has not been built. I would want the place to have been around for a few years and have a much better idea on the financials and reserve fund.
I almost only purchase pre-construction. There is risk, but also reward. And most of the risk is due to a lack of experience, education and research about the process.
I have no problem recommending pre-sales to my clients, but I've sold enough of them to know all of the good and bad of it.
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Old 11-03-2010, 01:21 PM   #10
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Ok I should rephrase what I said. One of the companies backing University City is no stranger to this game, and has been playing it for a LONG time out in Toronto. Where during this last boom/bust a bunch of their proposals didn't stall out due to selling units at too low a cost.
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Old 11-03-2010, 02:00 PM   #11
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This is somewhat a biased opinion as you are selling something similar to this lol.
Regardless, 1+1 will always = 2 and buying something before it exists will always be a larger risk than purchasing something thats proven itself.

Quote:
Originally Posted by Winsor_Pilates View Post
Their personal wealth has nothing to do with it unless they are self-financing it. Even if they are, would they eat the cost if they're priced too low and have underestimated their budget? Or would they pass that cost back to buyers?

Buyers should be asking about the developer's financing requirements for construction.
Are they using lenders?
How many sales are required by the lenders before construction starts?
What down payment do their lenders need to see in contracts to finance the development?
How are they financing with such small deposits?

Unfortunately, people don't ask enough of the right questions or use a qualified Realtor who is experienced with pre-construction. They just see a big line, and small down-payment and jump in.


I almost only purchase pre-construction. There is risk, but also reward. And most of the risk is due to a lack of experience, education and research about the process.
I have no problem recommending pre-sales to my clients, but I've sold enough of them to know all of the good and bad of it.
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Old 11-03-2010, 03:22 PM   #12
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Wow! I was at the friends/family event on Friday night: it was packed, and I thought all the people there were just hanging around for the food and drinks... like me

I went with my brother who was looking to buy. But the units were waaaay too small. Like 350sqft for 159k!? That's just so freakin' small!
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Old 11-03-2010, 03:27 PM   #13
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From what I read in the latest Condo Living magazine, the size of the units are between 339 - 712 sq ft. In reality, how much can the developer really charge for a unit?

Here's the only link I could find online which quoted square footage. http://www.condosincalgary.com/site/...eb1ed515cb05f3
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Old 11-03-2010, 04:25 PM   #14
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After looking over its floor plans they are really sardine canning people in there.

The biggest 2 bedroom 2 bath they have is 718 sq feet at $237K (highest price) with bathrooms only accessible via the bedrooms. This is definitely a buy and rent kind of situation. Very good pricing though for first time buyers.

I wouldnt buy to live in personally but thats just me.
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Old 11-03-2010, 05:17 PM   #15
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Quote:
Originally Posted by Realtor 1 View Post
This is somewhat a biased opinion as you are selling something similar to this lol.
Which part?
About the development financing or the risk?

I'm also a Realtor in both AB and BC and work with buyers and resale listings as well.
My opinion, or bias if you will, is based on experience with pre-sales. I've seen and worked with a lot of them so know what to look for more than most.

Quote:
Regardless, 1+1 will always = 2 and buying something before it exists will always be a larger risk than purchasing something thats proven itself.
Absolutely, I wouldn't say otherwise.
The potential advantage to the extra risk is there as well though and makes sense for some buyers.
Getting a brand new place, getting to pick between all available choices (not just a few on MLS), potential gain in value before taking possession(in rising or stable markets) to name a few.

At the end of the day, it really depends on the buyer and their needs. I wouldn't say it's right for everyone, but to say it's always too risky isn't accurate either.
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Old 11-03-2010, 08:44 PM   #16
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The biggest 2 bedroom 2 bath they have is 718 sq feet at $237K (highest price)
My first apartment I lived in was a one-br at 600 sq feet. And I thought that place was small. Add another bedroom and bath in the extra 118 feet? Yikes.

And 350 sq feet bachelors - my garage is bigger than that!
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Old 11-03-2010, 10:25 PM   #17
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I think in this case TOD stands for Toronto Oriented Development, reminds me of some lakeshore condos in T.O. I looked at a couple of years ago. 330/sq. ft.! Wow. That seems pricey for the type of project.

Of course I'm not a Realtor and could be out to lunch on that.
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Old 11-04-2010, 12:34 PM   #18
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It is crazy but because of the pricing in this city....anything comes along priced that cheap many first time home buyers arent going to care about the size until they have moved in.
At the moment they are super stoked about getting their first place for next to nothing (compared to average pricing.)
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Old 11-04-2010, 04:29 PM   #19
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Incredibly, this thread shows up before their web site on Google.
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Old 11-04-2010, 08:56 PM   #20
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Incredibly, this thread shows up before their web site on Google.
Not if you search University City Calgary

Anyway, even looking at the 343 sqft units (the tiniest, your bed has to fold into the wall and your bed is in the living room which is also your kitchen). It seems better than dorm accomodations.

A lot of people are thinking about this for students, etc. and making rent off students and young workers, etc. probably.

That said, having experienced what square footage really means living in dorms and in Hong Kong, that's plenty enough. People in North America are really spoiled in terms of living space.

I'll be in Hong Kong for most of Nov/Dec and living in a place that's like the size of my current bathroom in total area.
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