CondoAdvisory Blog

Your daily project failure list is updated again. It seems we can’t get a break form major condo projects being put on the blocks for one reason or another. Surrey’s Sky Towers fails to get financing

Although this is obviously concerning, and coupled with the news we see every day it scares a lot of people, but the reality is that with the financial market situation, and the cost of construction, it is little wonder that developers are having trouble obtaining financing. As well, with the attractive prices that some of these projects were sold at it is little wonder that the profit margin may be very low or even negative with the current costs, making them not viable, so why would they want to go ahead with construction. This is not in of itself an indication that the market is in crisis, it simply means some projects are not viable and therefore cannot be financed.

Is it not better that the projects stops before getting underway, rather than getting into trouble later with unknown implications. This way the buyers can get there deposits back and move on if they choose. In fact, if the market continued to increase these projects may have become even less viable with the construction costs and you may have seen (as we have seen in the last couple years) developers pulling the plug and asking people to pay more $ to stay in.

I think the media, as well as much of the public, make too much out of these stories and put the sky is falling spin on them, when really if you look at it, it makes sense. When buying something as a pre-sale, with changing costs and market conditions, there is an inherent risk that things may change and not make sense anymore, it is just that with years of increasing prices this risk was temporarily removed. I think this is more of a reality check than a crisis.