The Vancouver Business Thread

[jollyburger]

Polygon bought two sites last year it felt represented good value, but it has yet to acquire any sites this year as new home prices have continued to slide following caps on immigration announced last year and ongoing affordability concerns.

“The problem when values are falling is that it makes it very hard to understand what you can actually afford to pay for land,” Chrystal said. “If the top end price is off 20 per cent, then you need a little bit of room on your construction cost, you need a little bit of room on land, you need room on DCCs.”

The challenge right now is that new home values continue to fall, with a knock-on effect on land deals.

“Once you find the bottom on pricing, you can engineer what you can afford to everything else, which includes land,” he said. “There needs to be a reset in demand so that the [home] buyers come back and reactivate the land buying cycle.”

A listing in the Edmonds area of Burnaby is a case in point. It has an approved development permit in place for 29 storeys, but with no one building highrises, the price was slashed from $13 million to $5.8 million – suitable for a six-storey woodframe project site. It also ensures the developer the kind of margin they’re looking to build into projects – 15-20 per cent, versus 10-12 per cent a few years ago.

“Now we’re getting action. The big guys are coming out,” Goodman said. “There’s been a change in tempo, and it’s not that prices are rising. Sellers have capitulated and are meeting the requirements developers need on their profit margins, which are definitely higher now.”

https://www.westerninvestor.com/british-...ce-smart-in-a-challenged-market-12338297