Patrice Groleau, owner of McGill Real Estate Agency, Montreal Condo
Montreal, July 30, 2012
Bell Centre Condos – Several articles have been talking about the fact that there is an overabundance of condos in the Bell Centre sector of Montreal, and here is my theory on the subject.
The condos of one of the first towers in the Bell Centre sector, the Crystal de la Montagne in Montreal had sold at a very good velocity at the time. Why? Because it was the only high tower that was available in the neighborhood, which had no competition in its immediate or even close proximity.
Today, the first condo tower launched in the Bell Centre neighborhood has a good start with a traditional marketing strategy for the sale of condos in large Canadian cities, namely, 10% of condos sold below the cost of construction which are reserved for investors that follow the same developer from one project to the other. And then about 20% of the condos sold at cost-price which are set aside for privileged buyers who are the first ones to buy, as well as another 10% of condos for regular buyers which gives a total of 40% sold condos (according to the sales representatives). It is obvious that with such a strong condo market in Montreal, it is not difficult to sell new condos at cost or below-cost. The challenge rests in the 70% of condos sold at a profit. The 30% of condos “sacrificed” to reach the quota to obtain financing (for the construction) cannot be considered in the sales statistics of the condo project using this technique. We have projects that have used this technique in the past where 50% of the condos were sold in 2 weeks however it has taken more than 5 years to sell the balance at a higher price to compensate for the losses on the first 30% of sales. This technique that I have nicknamed “The Toronto Technique” does not work as well as we may believe in Montreal.
Most of the big developers throughout Quebec do not use this technique. They still put emphasis on the balancing out of prices among the available condos in a project. Whether you are the first or last to buy, the prices are balanced out. The difference between the first and last buyer resides in the availability of condos, the flexibility in layout modifications, one-time promotions, move in date delays and possible price increases relating to market spikes and construction costs.
The problem with the Bell Centre condos resides in the fact that 5 major towers of hundreds of condos each totaling +2000 condos were launched simultaneously. Not a success for all. Had they been launched one at a time, the sales of the condos would have been done at a normal frequency. However, until the complete details of the different condo tower are not entirely disclosed, the buyers of the condos will have to wait before making a decision. Would you buy a condo if you knew that the competition across the street would be revealing details such as prices, areas, visual renderings of their project the following month? In short, buyers are at a halt and will make their decisions once the details of the 5 towers are put on the table. However, the problem still resides in that the square footage price ranges between $500 and $600 which does not represent the budget of the masses. The sales will be divided and diluted throughout the 5 towers. According to a sales representative, one tower generated 20 sales of condos in a little over 4 months. Condos probably sold closer to cost. We therefore see that they are not ready to be sold quickly in this case. The problem is that some of the developers are not used to these long periods of sale (although normal). Financial plans and personnel wages are not established according to such delays. The other major challenge is that these condos are not in as sought-after location as other neighborhoods in Montreal. The sector that will benefit the most from its situation is District Griffin (Griffintown) with services in close proximity, along the water, as the neighbor of Old Montreal but mostly because of its better prices. If you are looking for a condo in Montreal in this price range, opt for Old Montreal or even District Griffin for better prices!
McGill Real Estate Agency who represents most of the large-scale Montreal condo projects and developers is known as the most selective when it comes to the projects that the agency accepts to represent. With a team highly knowledgeable in the analysis of the Montreal real estate market, only the best projects under optimal conditions are retained. For a safe bet on the quality of a project, a developer as well as a condo in which you want to invest in Montreal, look into a real estate project represented by an agency truly specialized in the sales and marketing of condos in Montreal…McGill Real Estate is the real deal!