Gateway Midtown... Cancelled
http://www.canada.com/calgaryherald/...1-eede18ff4022
CALGARY - Construction of a high-profile multi-million dollar Beltline residential condominium project, which included two towers at 26 and 30 storeys, has ground to a halt due to elevated costs, the Herald has learned.
The news regarding the Gateway Midtown development at the corner of 10th Avenue and 4th Street S.W. comes at a time when the number of new condos under construction in Calgary is at a near record level while the number of condos for sale on the MLS market remains high as well.
A recording on an information line for the Gateway Midtown project says: "You have reached the Gateway Midtown purchaser information line. At this time, we regret to inform you that Resiance Corporation will not be proceeding with construction of Gateway Midtown as insurmountable construction costs have made this project financially unfeasible."
"If you have purchased a suite at Gateway Midtown and you are calling about your deposit, rest assured that your deposit will continue to be held in lawyer's trust or covered under the provisions of the Alberta New Home Warranty Program and therefore protected under the terms of these two provisions. We are unable at this time to answer further questions about your deposit as all contracts associated with the project, including your purchase agreement, have been assigned to the senior lender. You will be contacted by an administrator acting on behalf of this lender to advise you of the status of your contract to purchase. As any questions regarding your contract can only be answered by this administrator, we ask for your patience and understanding while this unavoidable process transpires."
In a statement to the Herald, Resiance Corporation said the Gateway Midtown project is "suspended, at least temporarily, pending the decision of the senior financial lender whether to resume construction." The decision was made because of "dramatic escalations in construction costs, unabated since the project launched in 2005."
There are more than 500 purchasers of units in the 650-unit project.
The company said this decision has also resulted in the downsizing of 41 Resiance salaried and hourly employees.
The number of condos currently under construction in Calgary is 10,643 - 102 units shy of the record established in May, and 44 per cent higher than a year ago, said Richard Corriveau, regional economist for the Prairies and Territories for Canada Mortgage and Housing Corporation.
"I have heard rumblings that this might occur," said Corriveau, of the general condo market in the city and projects not proceeding. In the condominium resale market, the Calgary Real Estate Board at the end of July was reporting the month-end inventory of condos for sale in Calgary at 2,888. There were 1,183 new listings added in the month, up 5.91 per cent from July 2007, and sales for the month showed an 11. 28 per cent decrease (535 units) compared with a year ago while the average days on the market to sell a property rose to 52 from 33.
Those numbers had an impact on MLS sales prices. The average sale price in July for a condo in the city was $296,338 which was 6.98 per cent less than a year ago ($318,582) while the median sale price dropped by 8.19 per cent to $273,500 from $297,900 in July 2007.
"What's occurred in 2008 is we've seen a sharp pullback in resale demand. We're seeing a weakening in rental demand and the single-detached new home market has also pulled back in their production quite strongly," said Corriveau. "Now the (new) condominium market stands out as anomaly. It's bucking the trend of what's occurring in every other housing market within the Calgary CMA.
"That poses some concern as you consider the indicators that have fuelled weaker activity elsewhere, it's surprising that the multi-family market hasn't responded."
Those indicators include weaker net migration here, employment growth softening, income growth moderating, rapid price escalation in all markets leading to weaker demand.
But Corriveau said one of the factors acting in the new condo market's favour is the time horizon to construct condo projects and eventhough we are currently faced with weaker demand, the vast majority of these projects aren't scheduled for completion for another year to three years or more. [email protected]
Quote
The banks are gonna want some money from someone though.
