A rare development opportunity has hit the market in Markham, but not under the best circumstances.
A mostly vacant lot with just the beginnings of a condo building at 7713 Kennedy Rd. is being sold under power of sale.
The building lot.
The property, which was supposed to be a four-storey, 15-unit residential condominium building, is now being sold for $5,900,000.
The sale of this development really just shines a light on the financial strain that some developers are facing in the current market.
Over the past year, we’ve seen soaring construction costs, rising taxes, and dramatically increased development charges forcing developers to delay or abandon new projects, especially without the usual surge of pre-sales.
Not to mention, Toronto’s condo market has been in a major slump, and as a result, we’ve seen a growing number of projects go into receivership as developers struggle to secure financing.
So now, developers who purchased land at peak market prices are grappling with the reality of reduced demand and increased costs, leading to financial distress.
In short, we wouldn’t be surprised if we see more sales like this one in Markham.
But is one person’s misfortune actually a great opportunity? Maybe.
The property, comes with approved plans and permits for a 33,184 square-foot residential project, which is an unusual find in a desirable suburban area where homes typically sell for close to $2 million.
For an investor with the means to take on a development project, opportunities like 7713 Kennedy Rd. means they don’t have to deal with the heavy lifting of approvals and permits.
So, all they need to do is step in and complete the build —potentially at a lower cost than if they had entered the market a few years ago.
The start of construction at 7713 Kennedy Rd.
However, the construction costs could be higher with the new U.S. tariffs set to increase the cost of raw materials.
And the other risks remain high. There are fluctuating interest rates and ongoing economic uncertainty that continue to impact the real estate sector.
Not to mention property values in Milliken Mills East dropped six per cent in the last 12 months, meaning potential returns might not be as lucrative as they once were.
Just in case you’re curious, the average price of a condo in Markham is $666,360.
So even if you sold all 15-units at that price, once factor in the cost of construction which can be anywhere $680 to $850 per square foot, you’re looking at a significant loss.
In short, this is really only a good investment if you’re a well-capitalized buyer who is in it for the long haul because, in the short term, you’re not seeing any money.
