Prével, one of Montreal largest condo developers, is refusing to sell multiple units to buyers as a way to discourage investors and maintain housing affordability in the city.
“We won’t sell more than two units to our buyers,” said Prével co-president Laurence Vincent. She noted the policy “may sound ridiculous,” especially in an environment where potential buyers arrive at new developments and say “I’ll take 10.”
Vincent was speaking at a conference exploring Montreal’s housing market outlook for 2020, presented by the Quebec Professional Association of Real Estate Brokers (QPAREB). The annual event brings together more than 12,700 real estate brokers and agencies from across the province.
Instead of selling to investors, “we’re targeting owner-occupants,” Vincent said. “It’s easier to sell to investors, but I think we win by having more individual buyers, who create value and will remain owners over the long-term in Montreal,” she said to applause.
“I’m not always popular with my sales team,” Vincent added.
Prével has built more than 11,000 housing units during the past 40 years, including thousands of condos in Old Montreal and the Griffintown neighbourhood, where it was a pioneer in the area’s current residential construction boom.
Prével looks to new neighbourhoods
Vincent says with land prices becoming more expensive in the core, Prével is looking at less central neighbourhoods in Montreal, primarily in the eastern sector of the city.
Last year, Prével kicked off sales for the first phase of Esplanade Cartier, a residential project on one of the largest sites still available for development near the eastern edge of downtown Montreal.
Prevel’s aim to preserve affordability has been aided by funding from the province’s giant real estate fund Fonds Immobilier de Solidarité FTQ, she said.
Fifteen per cent of the Fonds’ portfolio is allocated to social housing, said Carole Handfield, vice-president of investments at the fund.
“For a developer, it’s hard to do what we do. It’s almost impossible,” Handfield says. However, since social solidarity and mutual aid are part of the fund’s mission, “we’re happy to participate in social housing in the city.”
Handfield noted the Fonds immobilier, which is participating in the financing of Devimco’s 57- and 61-storey Maestria condo and rental development in downtown Montreal’s Quartier des Spectacles, made a $10-million contribution to social and affordable housing in the area surrounding the $700-million-plus development.
As of May 31, 2019, the Fonds immobilier had 61 projects worth $4.2 billion in progress, 68 properties under management and 1.5 million square feet of land for development.
Luxury condo sales jump
Also at the conference, Charles Brant, director of the QPAREB’s market analysis department, said sales of condominiums above $1 million jumped by 33 per cent in Montreal in 2019.
“Condominiums are increasingly exposed to situations of multiple offers, with sales being concluded at a price higher than the asking price,” he said.
Sales of single-family homes priced above $1.5 million increased by 12 per cent in 2019. Overall, single-family home prices averaged $340,000 in the Montreal area, up six per cent from 2018.
The real estate brokers association is forecasting a six per cent increase in transactions and in prices for single-family homes and condos in 2020 (to $360,700 and $285,200, respectively).
Brant cited positive migratory flows between provinces as one of the reasons for the current “phase of exuberance” in Montreal’s housing market.
“It’s highly probable it will be in Quebec’s favour in 2020,” meaning that for the first time in decades more people will move to the province than leave it for other provinces.
What’s driving the housing market
Montreal’s housing market has been boosted by an increase in international students and temporary workers from abroad, added Hélène Bégin, senior economist at Mouvement Desjardins.
There has also been an influx of capital into real estate and positive perceptions of the city have returned.
Bégin said another reason for the buoyant real estate market is that the province’s 2.6 per cent increase in gross domestic product last year outperformed the rest of Canada, possibly for the first time.
Residential real estate in the province is also less cyclical than elsewhere in Canada.
In addition, Quebec’s public finances have been straightened out and budget deficits have disappeared.
However, Montreal’s residential market has been showing signs of overheating for the past year, and housing affordability is now at “critical levels,” she said.