Chronic delays in condo construction are pushing back occupancy dates, in some cases by as much as two years. Of the 25,000 condo units supposed to be completed in the GTA in 2012, just half will finish on time. The rest will be bumped for completion no earlier than 2013, and even then, according to RealNet Canada President George Carras, finishing that inventory on time will be difficult.
“The most we can produce is 15,000 a year,” he said this week. “There’s a capacity issue that seems to be repeating itself.”
According to Carras, developers have been missing scheduled completion dates for the past seven years. And the wait times continue to climb. There are 55,000 plus units listed as going into construction in 2013, with 88 percent of that inventory already sold.
If the industry continues at the current levels of construction, investors will be waiting up to six years for condos to become ready for occupancy. Those expecting to buy and hold may be finding themselves losing cash flow while waiting for units to be finished, while investors hoping to flip will have to hang on until pay day.
So who’s to blame?
Some industry experts are blaming overzealous marketing campaigns from developers promising unrealistic completion dates to get investor dollars through the door. According to CMHC senior market analyst Shaun Hildebrand, “Completion dates advertised by the developers can be a little too aggressive.”
Others are pointing to the slowing number of Canadians entering trades and construction, claiming there’s a shortage of workers that simply doesn’t meet the demand. Carras cites the complexity of building numerous different structures as one of the reasons things are slowing down.
“It’s not an assembly line at Ford or Chrysler,” he says. “You’re out in all weather, no two buildings are the same, you need the trades, permits. ... Every single one of them is a one-off.”
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