Metro Vancouver developers facing flatlining revenues: market update

Artistic rendering of Citizen at 4663 Kingsway, Burnaby. (Anthem Properties)

Fewer new pre-sale homes were released in the combined Metro Vancouver and Fraser Valley market over the third quarter of 2023, according to a new market update by MLA Canada.

Over the summer, there were 18 new project launches across the Lower Mainland with a combined total of 1,805 new units. This is down by 39% over the same period in 2022.

This includes 827 concrete pre-sale units (down 35% year-over-year), 895 woodrame pre-sale units (down 30% year-over-year), and 83 pre-sale townhomes (down 80% year-over-year).

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“For developers of presale projects, these conditions have created a difficult environment to operate under. Developers today are facing the pressure of flatlining revenues,” reads the update, noting that there are 20-year highs in land holding costs and 50% in construction costs over two years.

With that said, MLA Canada analysts say demand was still relatively strong, with the sales rates of the new pre-sale supply almost equal over the second and third quarters of this year. Pre-sale launches in the third quarter had a strong absorption rate of 42%, with 750 units sold. In contrast, the same period in 2022 had an absorption rate of 26%.

Furthermore, most of the launches in the third quarter saw strong uptake within the first 60 days of sales. The limited supply of new listings kept prices stable.

It is suggested that prospective buyers and sellers may have held back on making any moves until the dust settles on the Bank of Canada’s messaging on the direction of the policy interest rate, and until they have a better idea on market conditions.

The fourth quarter’s pre-sale performance will set the tone for releases in the first half of 2024.

“In Q3 we observed a release of new presale product that’s more reserved compared to historical averages. Overall, sales revenues have not yet caught up to peak values seen in 2022 and consumer confidence has shown some hesitance, leading to fewer presentation centre visits and implementation of larger incentive programs to close deals,” said Garde Macdonald, MLA Canada’s director of advisory.

“However, there are silver linings. Specifically, early Q4 project results are shining a positive light, especially for proactive developers who from project inception, have focused on product-market fit.”

MLA Canada

One of the most notable project launches over the third quarter is Debut, which is the first of many towers of Beedie Living’s 96-acre Fraser Mills redevelopment on the Fraser River industrial waterfront in southwest Coquitlam — near IKEA and Cineplex.

The 36-storey Debut tower will contain 318 homes, including 286 condominium units and 32 townhouses. Pre-sales for this tower launched in early September. According to MLA Canada, 275 homes were sold by the end of September, establishing a sale rate of 86% — the highest rate amongst major launches over the summer.

This was trailed closely by Anthem Properties’ 66-storey Citizen tower in Burnaby’s Metrotown district, which will produce 372 condominium units. Its sold rate was 70%.

At 692 ft in height, Citizen, previously known as Metro King, located at 4663 Kingsway (site of Metrotown’s previous Cactus Club Restaurant) will be amongst Metro Vancouver’s future tallest towers, exceeding the height of Living Shangri-La.

Artistic rendering of the Debut condominium tower at Fraser Mills. (Beedie Living)

4653-4673 Kingsway 4638-4670 Hazel Street Surrey Metro King

Artistic rendering of Citizen at 4663 Kingsway, Burnaby. (Chris Dikeakos Architects/Anthem Properties)

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