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Vancouver’s Cressey Development Corp. is expecting a fast pre-sale sell-out of an uber luxury 127-unit mixed-use waterfront project in downtown Kelowna, and developers are bidding serviced land in the city to above-appraised prices, but the land action slows when rezoning and risk come into play, local agents say.
Hot as Kelowna real estate is this year, it remains haunted by past downturns.
Cressy’s project, known as Caban and consisting of upscale residential and retail on the lakeshore at Kelowna’s popular Gyro beach, resurrects a plan for a similar project on the same two-acre site that was put on pause during the 2008 recession.
The environment is different today, according to Caban sales agent Taylor Musseau, who said a couple of invite-only previews in Vancouver and Kelowna were enough to register a potential 200 condo buyers for the Caban development.
Musseau expects most of the buyers will be owner-occupiers when Caban opens in 2024, but Cressey appears to be hedging its bets. The $850-per-square foot residential units, which include seven townhouses, will also be available for short-term rentals, Musseau confirmed.
Another greenfield site of a stalled development, a 1.41-acre parcel on Pacific Avenue and Pasnak Street in Kelowna that resulted from a six-lot land assembly, was sold this June under court order. The site had reached third reading for a 110-unit condo development before the developer bailed out two years ago.
Appraised at $7.02 million, it sold June 16 for $8.31 million after multiple bids.
In a pending deal, an unnamed Vancouver investor offered $3.27 million for a 0.58-acre Kelowna site with potential for 45-units of residential, listed by Macdonald Realty, Kelowna.
That pencils to $5.45 million an acre or $128 per square foot, which is getting close to Lower Mainland values.
“It is just mind blowing what has happened to Kelowna prices,” said Jeff Hudson, principal and co-founder of HM Commercial Group in Kelowna, whose recent report on land sales tallied more than $24 million in deals since May of this year.
Hudson said out-of-town buyers include groups from Ontario, Saskatchewan, Alberta and B.C, the latter primarily from the Lower Mainland and Vancouver Island. Seymour Pacific Developments, a large multi-family rental developer based in Campbell River, B.C., is a “major player” in Kelowna, Hudson said, while Vancouver-based PC Urban has been buying industrial sites In the area.
Cressey is scouting for more land in B.C’s second-biggest city outside of the Lower Mainland, said Hani Lammam, executive vice-president at Cressey Development Group. Vancouver mega residential builders Adera and Polygon already own land in Kelowna.
“Kelowna has grown up,” Lammam said, “It is a real contender.”
But the hyper-action stalls for land outside of Kelowna's core, said Okanagan rural land specialist Scott Marshall of Re/Max Kelowna, whose current listings include a 142-acre site, zoned as rural acreage, on Huckleberry Road, Kelowna. The asking price is less than $30,000 an acre.
His clients, he said,are mostly locals, including patient developers who realize it may take months, perhaps years of planning to get permits in place to achieve higher density rezoning. Marshall estimates that values for rural Okanagan land have increased perhaps 15 per cent over the past five years, far below the 50 per cent rise seen in Kelowna in the same time frame.
“Despite all the hype, it seems like a normal year here,” he said.
The central Okanagan residential market has cooled down, confirms Kim Heizmann, president of the Association of Interior Realtors, which reported August housing sales were down 15 per cent from August of last year, and listings had dropped by 45 per cent. The benchmark detached house price, however, is up 35 per cent, year-over-year, to $962,000, fourth-highest in Canada.
“The [housing] market has slowed down slightly due to a chronic lack of inventory but it’s by no means slow,” Heizmann said.
