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Montreal real estate: Builders can't keep up with demand for condos downtown

Demand for condos in downtown Montreal is so high there were only 60 units available this spring, down 54 per cent from last year.

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Despite a record-setting number of new condo projects under construction in Montreal, eager buyers are snapping up condos so quickly that builders are struggling to keep up with demand.

According to a recent report by Altus Group, a Montreal company that provides market intelligence and other advisory services to real estate developers, the total number of unsold units in projects that were recently finished or in construction dropped 43 per cent in the past year in the greater Montreal area, from 1,220 to 690 units last year.

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In the downtown area, there were just 60 move-in-ready new condo units available to buy this spring, 54 per cent fewer than this time last year.

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Altus analyst Vincent Shirley said the new condo market was very slow from 2013 to 2015, leading to an oversupply of unsold condos. But since the market began picking up in 2016, that inventory is now almost cleared out.

“The resale market is getting hot and tighter,” Shirley said. “In the new condo market, there is virtually no remaining inventory in the projects that have been constructed already as well as the projects being built right now. There are literally very few units remaining.”

In the downtown area, Shirley said it’s becoming more common for new promoters to sell half or more of the available units in a new condo building before construction even begins. In a few cases, he said, every unit in the building was sold without ever officially opening a sales office.

“This is a trend that is comparable to what we’ve seen in Toronto and Vancouver,” Shirley said.

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In the Montreal area, 77 per cent of units in condo projects under construction have already been sold, up six per cent from last year. In the downtown area, the number jumps to 85 per cent — a 12-per-cent increase over last year.

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The epicentre of buying activity is downtown, Shirley said, but the market is also active in midtown, around Mount Royal and areas near the métro or future REM stations. In suburban areas in the North and South Shore that are not well-served by transit, he said it’s still a buyer’s market for condos.

While the majority of buyers in Montreal are from Quebec, Shirley said condo sales officers, promoters and developers have noticed a growing number of investors from other provinces in Canada as well as overseas. According to Shirley, most of these buyers are from Toronto, with some from Vancouver and a growing share from China.

“If you look 12 to 18 months back, foreign investors from other Canadian cities and other parts of the world — people not from Montreal — were marginal,” Shirley said. “They were almost nonexistent. Promoters and developers did not consider those guys. But now they’re coming to Montreal. There are here. The trend is increasing, and they have an appetite to buy.”

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