Photo: SHD Aerial Services
Downtown building one of those affected by STR legislation
A number of government regulations aimed at improving the housing market are having the opposite affect, according to one Kelowna real estate professional.
Jeff Hudson co-founder of HM Commercial Realty made the comment to a room full of interested onlookers during the company’s annual Crystal Ball event on the state of the real estate and development market in Kelowna.
“New high rise projects need to be average $1,200-a-square-foot to provide any level of profit and the developer needs 60 to 70 per cent in pre-sales,” said Hudson.
“There are not enough home buyers to have these projects make sense. It relies on investors and the problem is between high finance costs, the speculation tax, prohibition on foreign buyers and the change to short-term rentals, it’s removed the flexibility for a lot of these investors.
“Ask any condo developer…investors for condos are not at the table right now.”
Hudson said demand for housing is strong and will continue to be as immigration and inter-migration numbers increase, yet interest rates, new regulations and rising construction costs continue to be the biggest obstacles to overcome.
“The effects of the short-term rental program are yet to be seen and we predict a slow recovery this year with increased activity in the second half of the year.”
Panel lends its voice
Thursday’s event also featured a diverse panel with expertise on various aspects of the industry including Shane Worman with Worman Commercial, Dr. Lesley Cormack deputy vice-chancellor and principal at UBCO, Krista Mallory from the Central Okanagan Economic Development Commission and Daniel Walsh project leader for the Tolko mill site.
“I don’t know how many units (STR regulations) it’s really going to free up going to the long-term market. I worry it
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