The sale of an 8,250-square-foot (766 square metre) lot in Vancouver’s Coal Harbour for $13.1 million is considered a record price paid for a condominium development site in a city already recognized as having the second least affordable homes in the world.
The land value for 1250 West Hastings Street pencils out to $1,587 per square foot. “That is about five times the city record,” said John Gee, an agent with Colliers International in Vancouver.
But Macario (Tobi) Reyes, CEO of Vancouver-based Port Capital Group, which bought the site, said the allowable density on the land means the deal is actually close to current Coal Harbour real estate values.
The site has development permits in place for a 14-storey tower with 25 condominiums and 3,500 square feet of office space. A heritage density allocation negotiated with the City of Vancouver added 10% to the existing 5.7 floor-space-ratio (FSR) allowed on the land. “The density works out to about 6 FSR, which is the maximum we will go,” Reyes said.
This would translate into 49,500 square feet of space, equal to a buildable-per-square value of $264, still at the top end of the Vancouver market.
Reyes said he expected the condominium units would sell in the $1,000 to $1,500 per square foot range, not a rare price level in Coal Harbour, one of Vancouver’s most expensive residential enclaves.
A LandShare report published by Colliers this year, which tracked prices being paid for residential sites in Metro Vancouver, found that typical prices in Vancouver’s West End and downtown ranged from $190 to $250 for each square foot of buildable space allowed for concrete condominiums.
Still, the Port Capital deal posted a much higher land price than recent comparables. For example, a numbered company paid $798 per square foot in land value for a 6,000 square foot lot on Granville Street that has a FSR of
3.5. This translates into a buildable-per-square-foot price of $228, according to Colliers.
The block buster sale in the West End/ downtown area this year, however, is the purchase of an entire block on Alberni Street and Nicola Street, where Wall Financial Corp. paid $83.5 million for a total of 43,182 square feet with a FSR of 6. If no higher density is negotiated in what is seen as long-term development, this works out to $322 per buildable foot for the land, which is zone for both residential and commercial use.
The prices being paid for potential high-rise condominiums indicates a market out of whack, suggests real estate analyst Frank Schliewinsky, principal of Strategics Marketing, which publishes the Vancouver Condo Report, a long-running industry newsletter.
Over the past 12 months the average asking price for new high-rise condos in Metro Vancouver has increased by 26% and the average price per square foot by 16%, he noted. And, based on what developers are paying for land, future condominium prices appear destined to keep rising.
Yet “[there has been] no big increase in average household income,” Schliewinsky said.
“The Vancouver high-rise condo market is becoming increasingly disconnected from the local economy and from local buyers,” Schliewinsky said “ In the past year, the market has shifted so much away from its historical basis that it really can't be considered as a ‘Vancouver’ housing market anymore.”Even Gee, who sold a 27,000-square-foot-lot at the University of B.C. earlier this year for $13.2 million – considered a record price at the time – is surprised at the prices now being paid for residential land. “It is ridiculous,” he said.