Developers amp up buyer incentives
June 28, 2019
Soleil White Rock: buyers earn interest on deposits. - RDG Management
Free flights, free strata fees for life, free mortgage payments for a year and 8 per cent interest paid on deposits for buyers are among the tempting incentives being dangled by Metro Vancouver condo developers.
In some cases, the generous offers are not enough for buyers in what the Real Estate Board of Greater Vancouver is calling the worst housing sales slump in 19 years. As of the end of May, there was an inventory of 766 newly completed and unsold condo apartments in Metro Vancouver—compared to 326 for all of 2017, according to Canada Mortgage and Housing Corp.
Currently, 25,158 condo units are under construction in the Metro region, representing 70 per cent of the total housing units underway.
MLA Advisory, a Vancouver research firm, estimates that about 5,000 concrete condo units in 17 separate projects had postponed sales launches as of April.
“The magic number is 50 per cent,” explained Vince Taylor, president of Platinum Project Marketing, referring to the percentage of sales a condo developer must achieve before they can secure construction financing from B.C.’s increasingly nervous lenders
This spring developers are turning to all forms of imaginative incentives to attract purchasers.
When RAR Development launched its Eliot condo project June 22 in East Vancouver where two-bedroom condos start at approximately $700,000, it offered to cover all housing costs—mortgage payments, taxes and maintenance fees—for the first year for the first four buyers.
Wesgroup is offering price discounts from $10,000 to $20,000 on its Mode condo project in southeast Vancouver. Intergulf is allowing condo buyers to put down 15 per cent instead of the usual 20 per cent deposit at its Hunter at Lynn Creek project in North Vancouver.
Platinum Marketing’s pitch for the News condo project in Abbotsford includes a choice of $3,000 worth of WestJet airline tickets or the same amount in a gift card to local shops.
But the incentive at the 26-storey Soleil White Rock condo tower may be the most lucrative for buyers.
Under this plan from developer RDG Management is an offer to pay buyers of the $484,900 to $1,609,900 condos 8 per cent interest on their deposit during the three years the Soleil project is being built.
“With the building set to be completed in mid-2022, this means that buyers can receive an extra $23,275 to $77,275 in interest from their down-payment of 20 per cent,” explained John Rempel, president of RDG Management.
Craig Anderson, director of marketing and sales for Magnum said that Soleil is attracting local downsizers who often take a line of credit loan on their existing house to cover the condo deposit.
“They are paying 4 per cent to 5 per cent on their line of credit, but they can earn 8 per cent on their deposit at Soleil,” he said. The earned interest is deducted from the closing price of a Soleil condo.
So far, 40 per cent of the Soleil White Rock’s 178 units have sold, and Rempel said he is confident the project will start construction this fall.
“It will be built,” he said.