Real estate – condos profit margins ?
Profit margins of real estate developers are today between 5 & 8 %.
From interviews with Patrice Groleau for newspapers…
The main reason being growing competition & increasing aspiration levels of buyers that has prompted real estate developers to cut down on their profit margins in a bid to offer the customers the best in the business.
Though this does not primarily mean that developers are not minting money in this period but it is not ‘killing’ anymore.
Experts feel that this is also a sign of a maturing market that now provides more value to the customer at the same price.
A sign of how market forces are compelling developers to evolve a more sustainable model rather than thrive on unhealthy profits.
So when you are shoping for a condo in Montreal you are paying for the Absolute Construction Cost (material, manpower, publicity, etc.) + 5 to 8% profit margin for the private investors & project owners (banking fees & interest are included in the absolute construction cost).
So don’t think you can ask for a 10% reduction, otherwise that mean the developer is loosing minimum 2% for you to live in his project.
Today the financial set-up are more complex because of the banks rquirements.