I’m seeing a lot of online chatter about this question. Are presales dead? Is the investor gone? Will high density presales ever be the same again? Let’s jump into it.I’m seeing a lot of online chatter about this question. Is the investor gone? Will high density presales ever be the same again?In short, to answer the question, I’m going to go out on a limb with a strong “no.
Assuming the numbers could be made to work, who will buy these homes? Well, another condition of the loan is, those presales need to be secured within a certain timeframe. This puts pressure on the developer to sell 60-70% — fast. But owner-occupier buyers need time to consider their options. It’s an emotional decision; they need to feel like it’shome. Naturally, finding hundreds of buyers prepared to make this weighty decision in the required timeframe is very difficult.
Thus, investors have largely left the movie, and developers of high-density projects don’t have a buyer who can help them meet their time-sensitive presale requirements. At the time, I was working for a major developer in Vancouver, and the market said, “no one will ever sell a presale again.” Then, in 2009, the conditions improved to the degree we were able to launch a 180-unit point tower in the Vancouver suburb of Burnaby — the first presale in greater Vancouver, post global financial crisis — to a lineup of owner-occupiers and investors who swallowed it up. Presales were on across the region again. History tends to repeat, and I believe it will again.