Montreal Condo – Up-and-coming developers
At the moment, among developers everyone wants to get bigger faster, but size is not a matter of will but a matter of financial and technical capacity. We want developers who have been building brick and wood projects for years with less than 50 condos to make the leap to high-rise concrete structures, etc. Unfortunately, the financial arrangements are often tight and there is no room to maneuver. There are not enough quality contractors to meet the current requests. How will these contractors go about choosing the developers? They will opt for those who have deep pockets and can give them repeat business in the long run and not offer them just a one-time deal. The classic mistake we currently see is the up-and-coming developer who believes he has the best property, the best project that will be sold in two weeks because all his friends and family told him that they would buy into the project. He will decide to be very aggressive on prices and sell 50% of his project faster but will stay stagnant for a while. Why? Because with an unbalanced price list, the remaining condos will be too expensive for what they are, and he will have no “good condos” left to increase his prices.
Technically, the first sold condo could be the last and vice versa if the price list and the unit mix is well balanced, but it is an art and it is a part of our expertise. I have seen projects, not the ones we have represented, sell out at 50 % in 2 weeks, but take more than 3 years to sell the remaining units, and we are talking about a project of only 50 condos. Another problem is that the budding developers base their prices on the initial estimate, which is often too low before all the surprises hit. The developer does not have enough money to build what is sold … so what he does is cut corners.
Cut corners on what? I have seen a whole slew of things (not in our projects) from starting at outrageous discrepancies between the gross areas (on plan) and net areas (once built), namely a 1600 sq. ft. condo becoming 1230 sq. ft. unit. Even voluntary breach of building regulatory codes or opting for a new contractor for the lack of funds and a bad reputation. Developers should respect their agenda and not skip steps, which is one of the major problems right now. (4 of 5)
Patrice Groleau owner McGill Real Estate Agency specializing in sales and marketing projects
Holder of a BA degree in Human Resource Management from the University of Quebec in Montreal, a graduate degree in Entrepreneurship from the University of Sherbrooke, Advanced Project Management at McGill University in Montreal. He also holds a degree in Risk Management from the University of Quebec in Montreal, a trade securities licence in Canada by the Canadian Securities Institute, in addition to having obtained diplomas from the Quebec Real Estate College and Real Estate Broker College in Quebec.