We recently sold-out Phase 1 of Sky Living, the second development undertaken by Allure Ventures. When we launched the project, concerns were raised by people who deeply care for me and the company about the timing. Given high interest rates, would people be interested in investing in property, especially in a luxury development like Sky Living? Afterall, weren’t we hearing stories of how people who had their mortgages renewed, were struggling to now make ends meet? Shouldn’t we have waited? Now, I have been doing this for many years, and I have complete confidence in my knowledge of the market. But I must confess, a very small doubting voice had started taking shape in my head, influenced no doubt by what was happening in the market. So, when we went live, there was a small amount of trepidation alright, and like any responsible business, we took measures to be ready to absorb the shock that comes with delays in sales. In the end, the market surprised me, and managed to silence the doubting voice that had taken shape. The rational me was proved correct. Purchasing a home is always going to be one of our first priorities, and even if one were looking to invest, real estate will remain a safe bet, especially in an economy like Canada.
I have been a construction entrepreneur for the past 18 years and if there is one thing that I have figured out, it is this. Investors are quite different from “homebuyers”. When I say “homebuyers: I am referring to those who are looking to purchase a property with the express wish of living in it, as opposed to renting it out or benefiting from re-sale/re-assignment.
For a “homebuyer” the unit itself is the primary focus. If they do not like even a tiny aspect about the unit, they might pass, even if it is the most connected property in the whole world. It is not surprising, since even the slightest blemish will start to rankle as you are forced to live with it day in and day out. Purchasing a home is often the successful culmination of years of sacrifice and hard work. So, “homebuyers” will want to make sure that their future home is as close to perfect as possible.
An investor on the other hand will look at the market and try to make an educated prediction about the future, 2, 5 and 10 years down the line. For an investor, the location, offered price and possible appreciation in value, short and long term, matters more than perhaps the unit itself. However, that does not mean that an investor will invest in a badly designed or constructed property. Let us remember that they too are value propositions during resale/reassignment or for the purposes of renting out. While the unit or property characteristics remain secondary, they can be called very close seconds in the list of priorities for an investor.
So, when an investor shows an interest during the pre-sale of a project, the one thing that I am sure about is that they would have already done their homework. They would have seen market trends for the last few months or years, studied the possible impact that factors like immigration, government spending on housing, changes in zoning laws etc. would have in the coming years on the housing market, and made an informed decision.
Which then brings us to an interesting situation. As discussed above, despite the property or strata unit itself being of secondary importance, when a prospective investor-buyer is visiting our sales centre, they are doing so with the express wish to confirm or repudiate their decision, based on the Stata unit design, facilities, and project amenities. They have almost always made up their minds regarding the financial feasibility of investing in one or multiple units in any project in that location. Now, they would like to tick the last few boxes and choose the right project to invest in. Afterall, Allure is not the only game in town and multiple projects from other reputed developers are going up simultaneously in the area around Surrey Centre, all of which can boast of the same connectivity and location benefits. They are hardly unique selling points! Which is why, under no circumstance, can anyone take a serious investor for a ride. The competition does not allow you. Any misstep, any minor blemish, and a competitor will gladly fill in where we fail.
This brings us then to the strata development itself. Whatever we discussed above ultimately boils down to the simple fact that the individual strata unit and the development it is part of are the final deal makers or deal breakers. So ultimately, the competition truly is just quality and customer service, and to a lesser extent, price. Everything else is either irrelevant or a leveler. Which is why at Allure we have such a strong focus on delivering quality and excellent post-sale customer service. If we don’t, we know we will vanish in no time. Anyone who is in the real estate development business will unless they produce a premium product.
Now, let’s look at the primary question. We know why a pre-sale can seem attractive for an investor. For actual “homebuyers”, ready-to-move-in properties have always been considered to be the more viable option. But is it?
A pre-sale, for obvious reasons, is always less expensive, often significantly so. Yes, one will have to wait a couple of years or more to get possession. But again, is that such a deal breaker? If you have enough for the down-payment now, aren’t you also getting a much better financial deal by going for a pre-sale? If you were thinking of saving for a couple of years to be able to make the downpayment of a ready-to-move-in condo in the same area, why wouldn’t you simply go for a lower price now and secure a property in the heart of Surrey. A couple of years down the line, you might be priced out completely from the more centrally located areas and be forced to look at the suburbs. Given the trends post Covid 19 in BC, there is a good chance that it will happen. Prices of properties will skyrocket.
As I had mentioned earlier, purchasing a home, especially your first home, is a huge decision. Transitioning to being a homeowner instead of a renter has an immediate positive impact on your lifestyle and even psyche. It is a huge box ticked, and the happiness and sense of achievement that you feel when you stand in your very first home is just priceless. So, if the decision is that critical, must we always seek instant gratification?
Good things await all those who are prepared to wait.