Real estate: New life for high-end condos

Left for dead a year ago, high-end condo projects are suddenly roaring to life.

Last fall, Canada’s real estate market went into a deep sleep. In Vancouver, construction of the glitzy Ritz-Carlton hotel-condo stalled, while at the nearby Jameson House luxury-condo site, builders got only as far as a half-dug hole when financing collapsed. The scene in Toronto seemed no better. The hysteria around the proposed 80-storey condo at Yonge and Bloor went from frothing to comatose. Again, unstable financing amid the global economic meltdown was to blame.

But just shy of a year later, the deep-freeze in the high-end market has seemingly thawed, rousing the beasts out of hibernation. “The confidence came back quite quickly,” says John O’Bryan, vice-chair of commercial realty services for CB Richard Ellis. “It’s almost as if somebody flipped a switch. People went from being very pessimistic to less pessimistic to reasonably optimistic, and it feeds on itself.”

How strong and deep the revival is is still a matter of debate. For now, O’Bryan says, it’s the less risky developments that are going ahead. The much-hyped Yonge-Bloor site is one of them. From the outset, demand wasn’t the problem. The original developer, Bazis International, had pre-sold 80% of the units in 2007, before the market got ugly. But after its financer, Lehman Bros., went broke, Bazis was forced to sell. Last month, Toronto developer Great Gulf Group acquired the site, and a leaner version is in the works.

With consumer confidence comes confident buyers. According to O’Bryan, sales are way up along the whole spectrum of the market. For example, Vancouver’s Concord Pacific recently sold 230 units of its Cosmo Condos in under three days, while the Richards units in tony Yaletown sold in 45 days. Good sales at the affordable end can only bode well for the luxury market, says Brad Lamb, a top Toronto condo broker. “The low interest rates have caused first-time buyers to come back to the market. Then they sucked up all the low-end inventory, and then it slowly ripples up. So now we’re finding that people are back buying in million-dollar property.”

As it was originally designed, the Ritz-Carlton in Vancouver towered in a category all its own. The lowest unit price was to start at $1.5 million, while its most extravagant penthouse would be a cool $28 million. But in February 2008, Hong Kong–based Holborn Group was able to sell only half its 123 condo units. The project was shelved until last month, when Holborn president Joo Kim Tiah applied with the city to add more height and residential density to the building, hoping to appeal to a slightly lower (still over $1 million) price point. Tiah hopes construction can begin next March.

And then there’s the swish Jameson House on West Hastings Street, which had been silent for almost half a year after suffering financing collapses and court battles. Jameson House Properties has since shaken the dust off and joined forces with a new managing partner, Bosa Properties. Construction of the 37-storey condo-retail tower is back to a roaring pace in order to meet the court-set occupancy date of May 2011 for the 103 pre-sale buyers. Daryl Simpson, Bosa’s VP of marketing and sales, says he’s confident, “given the shrinking supply of true luxury condominiums in Vancouver, combined with a more optimistic outlook on the economy.”

Back in Toronto, Brad Lamb is equally optimistic. He says his firm has five large-scale projects ready for construction and another 30 waiting for funding. “And they’ll all get it,” says Lamb, “because the banks are realizing that the real estate economy is a lot stronger.” –JASMINE BUDAK