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Financial Insecurity May Slow Toronto Condo Construction

Some condominium developers in Toronto are starting to feel the effects of the global credit crunch, and analysts say that could put some projects in jeopardy.

A condo market analyst says 30 per cent of the 120 projects currently being marketed in Toronto are teetering because they can't get financing.

Projects already being built don't appear to be in any danger of grinding to a halt, said Jane Renwick, executive vice president of Urbanation, a condo consulting firm.

But Renwick is concerned about smaller projects that haven't reached the construction phase.

The "A" locations - the ones downtown, or near subway lines and being built by proven developers - aren't affected. It's the "B" locations being presold by unproven developers that are causing concern.

"The Tridels, the Menkes of the world, they will have no problem. They've got good, established relationships with the banking community. It's the marginal players, the new kids on the block, those are the ones that we're worried about and that could represent up to 30 per cent of the projects that are not under construction," said Renwick.

Mike Labbé, who runs Options for Homes, a non-profit company that develops condos and townhouses for people on low incomes, has heard from other developers that it's taking longer than ever to line up financing.

"It's getting tighter. It's getting harder to find. People are having to be more creative. They're having to come up with more of their own equity to make it happen," says Labbé.

To raise equity, Labbé says, some developers are even selling off land they were holding for future projects.

For construction workers like electrician Tony Pacheco, it's a worrying scenario.

"It's scary," said Pacheco, "but at this site here, we have lots of work."

Renwick says that if the situation continues, "we're going to have disappointed buyers.

"They are going to get their money back, they will get their deposit plus one per cent according to their purchase agreement. They'll be protected, but disappointed."

 

Posted on Monday, October 20, 2008 at 11:55PM by Registered CommenterElaine in , | Comments1 Comment | References1 Reference

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Reader Comments (1)

hi

very useful blog.
highly recommend others to read it.
thanks
November 22, 2008 | Unregistered CommenterTrade Doors

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