Large residential towers, increasingly smaller apartments and urban sprawl accelerated by the impending arrival of the Metropolitan Express Network are some of the trends that are emerging for 2022 in the real estate market in the Montreal region, according to various promoters consulted by The duty.
Despite a pandemic that has been stretching since March 2020, the real estate market is boiling in Montreal, where a surge in prices has continued in recent months, especially in the city center. “There are no condos [à vendre] for less than $ 1000 per square foot ”in the heart of the metropolis, said with astonishment the president of the MACH Group, Vincent Chiara, in an interview with Duty. Until recently, “we saw these prices in Toronto, Vancouver, but not in Montreal,” indicates the developer, who is notably behind part of the real estate development planned on the former Radio-Canada site.
The interest of buyers is there, despite everything. And their profile changes. “Before the pandemic, there were a lot of buyer investors. Now, there are a lot of buyer occupants ”, such as workers and retirees, notes the head of investments and development at the Brivia Group, Vincent Kou.
Before the pandemic, there were a lot of buyer investors. Now there are a lot of home buyers.
The developer Broccolini notably presented last November his project Le Sherbrooke, which provides for the construction by 2025 of 562 apartments in a 25-story building near the city center. The construction of a tower of a similar height, developed by Cogir, is also continuing on Boulevard Robert-Bourassa with a view to its delivery in 2024. This will include 435 condos and rental apartments spread over 26 floors, in the middle of heart of downtown, where several other real estate developments are underway.
Residential condominiums
The real estate market, which has given a predominant place to rental apartments in recent years, also seems to be slowly changing course in favor of residential condominiums.
The latest edition of the publication The state of downtown Montreal, released last October, reported “sustained and uninterrupted growth since the second quarter of 2020 in sales of new condos and resales of existing condos” in the heart of the metropolis. The document also noted a “slightly stronger” surge in condominium starts compared to rental housing.
“We should go back to something central. The condo should regain popularity [en 2022], particularly in downtown Montreal, ”says Vincent Shirley, Senior Director, Innovation and Growth Strategies, within the Altus Group. A situation which is not unrelated to the rise in the value of land and to “inflation on construction costs”, he believes.
The condo should regain popularity, particularly in downtown Montreal
The vacancy rate for rental housing has also increased significantly in the city center since the start of the pandemic, in particular due to the radical drop in the number of foreign students in the metropolis, thus reducing the attractiveness of developers for this. type of housing in favor of condominiums for sale, adds Shirley. All the more so, he recalls, that investment funds will not want to finance a project “which is doomed to a deficit or to bankruptcy”. The expert therefore foresees “a swing back” in favor of condominiums in 2022.
Always higher
High-rise tower projects (sometimes exceeding 60 storeys) are also more and more numerous in downtown Montreal – whether we think of 1, Square Phillips, of the Brivia Group, or even the towers Maestria, developed by real estate giant Devimco.
Here again, this situation is not unrelated to the sharp rise in the value of land in the city center, but also to the growing scarcity of vacant lots, which stimulates high-rise construction. “It has become a reality, a standard, and people are adapting,” said Chiara, who also noted that the size of housing that is put on the market is increasingly reduced, so that those these remain financially accessible to buyers.
“This is where we’re going. Land is becoming more and more expensive, so density is becoming a key factor, ”also believes Mr. Kou, of the Brivia Group.
As development possibilities are increasingly restricted in the city center and housing has become too expensive for many buyers, developers are betting more and more on the suburbs. A phenomenon which should accelerate in 2022 in the context of the imminent arrival of the REM, according to the promoters consulted. This is particularly the case in the west of the island of Montreal and in Brossard, but also, increasingly, in the east of the metropolis.
“With the new Eastern REM [en planification], it’s a safe bet that things will become denser there, undoubtedly with less expensive land than in the city center, but which offer the possibility of getting there in 20 minutes by train ”, mentions the president by Cogir, Stéphane Côté.
The latter also considers that the By-law for a mixed metropolis of the City, in force since 1er April, will help accelerate this exodus to the suburbs, since developers will pass on to buyers the additional costs related to the requirements for inclusion of social and affordable housing put in place by the administration of Valérie Plante.
“We are at the limit of the tolerance level”, indicates Mr. Côté, adding that “many buyers will eventually look to other solutions because of the cost of purchase in Montreal”, which is higher than elsewhere.
Vincent Chiara, of the MACH Group, believes that it is a “social obligation” of developers, to meet the needs in terms of social and affordable housing in Montreal and not, on the contrary, “to pay to avoid doing it ”, as has often been the case in the form of financial compensation given to the City in recent years.