Rising Condo Prices Start with the Land
The future price of condominiums, even in suburban Metro Vancouver markets, can be expected to increase because of escalating prices being paid for land, according to a LandShare survey compiled by Colliers International in Vancouver.
The study found that land values have driven up the price-per-buildable square foot of new condo projects downtown, in Vancouver neighbourhoods and into the suburbs.
In downtown Vancouver, the average high-rise apartment condominium being built or planned will carry a cost of from $190 to $250 per square foot due to land values.
This means that these costs must be recovered before any construction; finishing or marketing costs are factored. For example, a 1,000-square-foot downtown condominium would have a land component value of from $90,000 to $250,000.
In the Chinatown area, the same type of new condo building would have a land component equal to $90 to $175 per square foot.
On the West Side of Vancouver, developers of high-rise concrete condos must factor in an average land value of from $175 to $250 per square foot.
In East Vancouver, where Cressy Developments recently paid nearly $10 million for a 19,820 square foot lot – $167 per buildable square foot – on Joyce Avenue, the average land component of new high-rise condo apartment is now from $100 to $170 per square foot.
In Richmond, the land value component of a new high-rise concrete apartment is from $65 to $100 per square foot, while it averages around $90 in most of Burnaby. Recent land sales show these prices may also increase, however. Intergulf Development Group, for example, paid $20.7 million this year for a 49,397-square foot lot on Nelson Avenue, or about $123 per buildable square foot.
New Westminster is among the most affordable markets, with a land component equal to from $30 to $75 per square foot for a high-rise condo site.
In central Surrey, where Tien Sher Investment Group plans a further 1,200 new high-rise condominiums, the buildable-per-square foot value, based on land prices, is from $18 to $25 per square foot.
However, the LandShare study found that townhouse developers in both South Surrey must now begin with average land prices of from $1.8 million to $2 million per acre.