The presale market — not unlike the resell market or commercial real estate market — has largely been at the mercy of the interest rates, making the past few months an interesting period in time. Everybody was (and is) expecting the Bank of Canada to begin cutting interest rates soon, but there was (and still is) uncertainty around exactly when.
However, many developers do not want to just stand still and wait, while still others may not be able to afford to do so. In other words, the presale show must go on and, amidst a market that's just as uncertain for buyers, developers left and right, big and small, are marketing their projects with buyer incentives.
At the top end of the spectrum is CURV, the 60-storey tower by Montreal-based Brivia Group planned for 1075 Nelson Street in Vancouver that's set to become the tallest passive house building in the world. Presales officially launched last spring and BakerWest, which is handling sales for CURV, said in September that 80% of the first release had been sold for nearly $200M.
Little has been said since then, but CURV received a fair amount of attention on social media in February after Erin Price Emery, a Vancouver realtor with RE/MAX All Points Realty, launched a "Car + Condo" promotion where buyers who purchased a unit in CURV would receive a Porsche thrown in for free.
"What this says about CURV is that they are seeking a renewed boost in interest/market attention via 'loud' marketing tactics," says Garde MacDonald, Director of Advisory for MLA Canada, a real estate marketing and sales firm. "Ultimately, these kinds of incentives create short-term noise in the market, but on a % basis, the incentive is less attractive than people may think. Given the high pricing of CURV (average unit price around $1.9M), the % of the incentive is in the range of 3-7%, which is a similar % that we are seeing for many active presale projects that are still chasing their financing target(s)."
Another notable incentive was provided by Wesgroup Properties for their Reign project in the Metrotown neighbourhood of Burnaby. Up until March 31, buyers who purchased a unit within Reign would have a luck-of-the-draw chance to receive a complimentary upgrade to a penthouse unit in what Wesgroup called a "ticket to the top."
A screenshot of a pop-up upon visiting Wesgroup's website for Reign.(Screenshot taken in March 2024)
On the other end of the spectrum, in terms of potential dollar value but not creativity, is Century Group, which kicked off sales earlier this year for their latest project within their Southlands Tsawwassen master-planned project. That project was The Granary, a collection of townhouses and garden flats that's set to sit next door to a Four Winds Brewing Co. restaurant and craft brewery. In light of that, and again perhaps to drum up some interest, Century Group was offering a $1,000 gift card to Four Winds Brewing Co. in what they called a "Beer for a Year" promotion.
Another project, One Bear Mountain in Victoria by 360Pacifica and Terracap, began offering a full golf membership, with a supposed value of $60,000, on the purchases of select units. (The project is a luxury resort-style one with amenities that include a golf course.)
Then, of course, there is your more standard fare buyer incentives, whether it be more appealing deposit structures such as Keltic Development's O2 in Burnaby, or traditional price discounts such as Peterson's Frame in Vancouver.
"Active presale projects in Q1 have had to utilize creative and often aggressive incentives to move units in a market that is very competitive for buyers," added MacDonald. "In a more robust market, we would typically see incentives in the range of 1-2% of listed purchase price, but in times like today with reduced demand overall, those incentives are up to 4-6% of the listed purchase price. Ultimately, each developers financial situation is unique and some have more flexibility than others when it comes to required purchase deposits and credit amounts that entice more sales."
Whatever the reasons may be — increased market buzz, more pens to paper — the prevalence of presale purchase incentives would likely not be as high as it has been over the past few months if the presale market was currently booming. Only time, along with the movement of interest rates, will tell what's to come.
