For developers in the presale market, 2023 was a challenging year. Still, many managed to find success.
A total of 13,049 units across 104 projects launched over the course of the year. It's a moderate total when compared across the past decade or so, and it's one that — according to real estate marketing and advisory firm MLA Canada — serves more as a reflection of prevailing economic conditions than demand.
Heading into 2024, MLA Canada says it expects some elements of the presale sphere to stay the same, and others to undergo change.
"We anticipate demand for presale product to remain consistent with what we saw in 2023 – below historic averages and primarily centered in 2-3 markets," the company said in its 2024 Intel report. "Pent up demand is likely to continue to build, only seeing some relief as rates recede and begin to bridge the current gap between what buyers can afford and what sellers' are asking."
Several factors will continue to impact the presale market, both positively and negatively. For example, on one hand, construction costs and development conditions remain less than ideal for developers. On the other, population trends continue to play a positive role — and there's (very) little question that 2023 likely resulted in some pent-up demand.
Meanwhile, one thing MLA Canada expects will continue this year is the furthering distinction, and possible consolidation, among presale developers.
"Developers that are well capitalized with deeply rooted relationships with financial partners and realtors will continue to be best positioned when facing the challenges at hand," says MLA Canada. "This is especially true in cases where their portfolio includes long land holds and multi-phased master planned communities."
This was seen in several instances in 2023, where prominent developers with such projects were able to launch at competitive price points, and ultimately outperform projects from less-established competitors. Those looking to compete with the more prominent builders will have to find the right blend of value propositions to attract potential presale purchasers, MLA Canada says, whether they be purchase incentives or attractive deposit structures.
The products themselves — that is, the homes — will also also be seeing some changes in the year ahead.
Because residential units are trending smaller, developers are placing an increased emphasis on efficiency. This includes efficiency when it comes to floorplans — such as through kitchen islands that double as dining spaces — as well as efficiency in interior design, such as through multi-functional furniture that provides inventive storage solutions.
PURA by Adera (via MLA Canada)
Outside of individual residences, the amenities that developers are providing are also shifting alongside the times; now, there's an increasing focus on modern workspaces and communal areas that encourage social gathering. Other fresh trends that are expected to continue growing in prominence are designated spaces for niche activities — think: golf simulators and bocce ball courts — and wellness-focused amenities, such as hot- and cold-plunge pools and steam rooms.
"Looking towards 2024, our outlook is anchored in the potential for increased macroeconomic stability and pent-up demand from the past 18 months," says MLA Canada. As a result of this, MLA Canada is projecting the Lower Mainland to see a total of 110 project launches in 2024, with an estimated 13,500 units and a same-year absorption rate of 43%.
The firm also says it is anticipating the first interest rate cuts to occur in Q3 2024.
"Although the path forward is not clear, we anticipate a marked improvement in unit absorption, prices, and consumer sentiment toward the second half of 2024 and into 2025. Amidst the uncertainties, one constant remains – the global allure of British Columbia and the Lower Mainland's real estate. Our region's relative stability, safety, and overall livability continue to heighten its value on the world stage."
MLA Canada's 2024 Intel report has officially launched. To download it in full, click here.
This article was produced in partnership with STOREYS Custom Studio.