VANCOUVER - The new prices for condos in the taxpayer-owned Olympic Village are more in line with the real estate market but they’re still no bargain.

That’s the analysis of a real estate analyst and a business professor who say it will still take years to fill out the Southeast False Creek project. And even then, it’s not likely that taxpayer will fully recoup the $740 million they invested in the project through construction financing and land sales.

On Thursday condo marketer Bob Rennie set the stage for the sale of 230 units in five buildings starting Friday. He laid out for journalists and fellow real estate agents an average price reduction of 30 per cent for the units, which comprise about half of the 474 unsold units in the village. Some units — principally the more expensive ones — have been reduced by as much as 50 per cent while price cuts on smaller, lower-priced units are closer to five and 10 per cent.

But Scott Brown, the vice-president of residential marketing for Colliers International in Vancouver, said those cuts may not be enough.

“It’s definitely come down from where it was, which tells you how far out of reality the prices were. They were really out of whack,” he said. “I don’t know if they have come down far enough to drive any really serious volume.”

Brown said Colliers’ market research has shown that three-quarters of sales in the area have been for units priced between $650-$750 per square foot.

But most of Rennie’s new prices in the Olympic Village are still higher than that. Brow cited a 1,445-square-foot two-bedroom unit now offered at $1.3 million. At nearly $900 a square foot, “that’s not a deal,” he said.

“Those prices are not low enough yet where people will say this is such a deal I’ve got to buy it now.”

Tsur Somerville, a professor at UBC’s Sauder School of Business, said he thinks Rennie’s overall repricing strategy will eventually drive enough sales for the city will recover the remaining $570 million it loaned for construction. But he’s doubtful there’s enough residual value left to also cover the outstanding $170 million owed on the city’s sale of the land to the project’s original owners, Millennium Developments.

“I think it is reasonable to say that it is highly unlikely that the taxpayers of Vancouver will see the full value of the lands the city contributed to the project,” he said.

Somerville said the prices are competitive to other built projects in the city but not for those being sold on the basis of pre-sales. “The reason to wait, if you want to be in that development, is not there any more,” he said.

By Thursday a dozen people had camped outside the sales office waiting for Friday’s opening sale. Rennie said that lineup was encouraging and he expects to see a crush of potential buyers over the weekend.

However, that pales in comparison to the interest in other condo developments in Metro Vancouver. On Saturday, Bosa Properties will also open its sales centre for its 45-storey, 202-unit Sovereign tower in Burnaby’s Metrotown. Earlier this week more than 400 people lined up and 2,600 signed on to a company website. The company sent people home after giving them numbers reserving their place in line, according to Bosa Vice-President Daryl Simpson said. He projected that up to 70 per cent of the units, priced at $650 a square foot or less, will be sold by the end of the weekend.

Rennie told reporters demand in the Olympic Village can’t be compared to pre-sales at other developments, noting he’d sold all but 11 of 540 pre-sale units in Wall Centre False Creek behind the village.

Pre-sales buyers put down between 10 and 20 per cent and have up to three years to pay while the building is under construction. But with built stock such as the Olympic Village, buyers have to complete their sales in 60 or 90 days. For that reason Rennie expects upwards of 70 per cent of buyers in the village will be people wanting to live there or who are buying for their family. There is little true investor demand for the units, he said.

Brown said he thinks Rennie’s prices may only translate into four to eight sales per month. “I think they will pick up some sales volume. I don’t think necessarily they will do 20 or 30 transactions a month and shoot the lights out.”

Rennie provided to The Vancouver Sun a selective list of six units he says illustrates the range of units being put on sale as of Friday.

At the very top is a three-bedroom, 2,500-square-foot 10th-floor condo in the Kayak complex at the east end of the village that once was listed at $4.8 million. He said cutting the price by 38 per cent to just under $3 million is a reflection of how much the market has changed since the last sale in May.

At the other end of the spectrum is a 566-square-foot sixth-floor studio in the Bridge buildings on the other side of the village which he once listed at $530,900 but which now is selling for $420,000.

Rennie did not provide the full list of units for sale or comparisons between new and old prices. But a backgrounder shows the cheapest unit under the new structure is a studio in the Bridge complex at $349,500 — which once was offered for over $400,000, while a luxury 3,400-square-foot three-bedroom unit in the same complex is $4.1 million.

Whether those reductions will be enough to spur sales won’t be known for several days but Rennie is banking on strong sales over the weekend.

He has promised the receiver he will sell 60 units in 60 days. He’s already reached that goal by half in a test sale his agents conducted over the last week and now he thinks he can sell 100 units in 30 days.

Not for sale in this latest attempt to right the tilting Olympic Village are the 60 luxury units in the two waterfront Canada House buildings.

The sale also represents a radical departure from the way the last public marketing was conducted in May.

Faced with a city deadline to pay a $200 million installment on its loan, Millennium Development put all of its stock on the market; Rennie believes the resulting flood of choices discouraged many buyers.

“If we made a mistake, there were different pressures on May 15. The developer’s goal was to pay down the loan and they brought out all of the inventory,” he said.

“When the consumer arrived, they had a pricing issue.”

Now, shackled by the image of a ghost town that continues to erode consumer confidence, the city and the receiver crafted a plan to rent out upwards of 127 condos on the back row of the village. Coupled with sales in the two Kayak and Bridge complexes and a high occupancy rate in 252 units of city-owned affordable housing, the receiver believes 70 per cent of the village will be occupied by the summer.

The biggest price reductions are for more expensive units that have been harder to sell. There is a lot of demand for smaller, cheaper units and so the reductions for them are consequently smaller.

Rennie said there’s been “no sign” of interest from bulk buyers of more than a couple of units, and the receiver is also not accepting further discounts off the new prices. Multiple bids will be accepted, but Rennie said that concept is “a bipolar opposite” to what has so far happened in the village and he’s not banking on bidding wars to break out.

Of the 31 test sales from last week, 12 were for units costing more than $900,000 and another 11 were for units priced between $600,000 and $900,000. The remaining eight were for units less than $600,000.

Rennie said those offers still need to be accepted by the receiver, and it’s possible not all will be completed. But he said the fact that more than a third of the people were willing to spend upwards of $1 million bodes well for city taxpayers, who are owed more than $700 million on the project.

Ernst & Young has broken down pricing on the 230 units in the Bridge and Kayak buildings this way: 59 will be less than $500,000; 61 will be between $500,000 and $750,000; 51 will be between $751,000 and $1 million; and 59 will be more than $1 million.

Ernst & Young said of the remaining 244 units to be sold 127 along the back row of the complex will be rented out temporarily to help fill out the village population.

jefflee@vancouversun.com

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