Homebuyers last year had an appetite for luxury product — from the resale market to new projects not yet built, like The Concord, a proposed development near the banks of the Bow River in Eau Claire, where a condo sold last fall for $7 million.
“We’re roughly close to 50 per cent sold in the first tower and we’re not even breaking ground until late March,” said Grant Murray, vice-president of sales for The Concord.
“I think in most cases our buyers are very mature and investment savvy. They’re kind of in the range where I don’t think, unless there was a prolonged period where the oil prices were going to stay down, I don’t think it’s having any effect on these people.”
Murray said five of seven estate penthouses in the development at 6th Street and 1st Avenue S.W. have sold for between $3.5 million and $7 million.
Vancouver-based developer Concord Pacific plans to build 218 luxury residences in two towers, including a $13-million penthouse. Construction on the 14-storey, 105-suite West Tower is expected to start in March with completion by fall 2017. The East Tower — 113 units over 17 storeys — is to be completed six months to a year after the first tower.
A Sotheby’s International Realty Canada report, released Wednesday, said fluctuations in oil prices introduced uncertainty into Calgary’s top-tier market in the fall, but had a nominal impact on sales as of the end of 2014.
It said historically low mortgage lending rates, a solid Canadian economy and ongoing migration and foreign investment into the country’s major cities offer the luxury market some stability heading into 2015.
“continued uncertainty in the oil market will impact Calgary real estate over $1 million, however, the degree of influence is still unknown. If employment and migration into the city remain at expected levels, sales are expected to remain on pace into early 2015,” the report states.
Calgary saw a 14 per cent increase in property sales over $1 million in the second half of 2014 compared with a year earlier, it said, despite the sudden decline in global oil prices.
Ross McCredie, president and chief executive of Sotheby’s International Realty Canada, said there is cautious optimism heading into 2015.
“No one is panicking right now,” he said McCredie, adding most buyers of high-end properties have built their wealth over a number of years.
“Those buyers understand cycles. They’re resilient. I think they know that $50 a barrel oil is not going to be the long-term outcome here … They’re pretty confident that things will come back,” he said.
Ann-Marie Lurie, chief economist with the Calgary Real Estate Board, said there is always going to be demand for certain types of homes.
“It’s a matter of what will happen because of oil prices,” she said. “It’s not really about the oil prices. It’s about the demand and what happens if incomes are affected. And really we’re looking at what’s going to happen to corporate bonuses and what will that do for people who are looking to move up? Some people it really doesn’t impact that much. So it depends on their financial situation.”
Lurie said the share of luxury resale homes to the overall market in Calgary has kept increasing over the past few years. Currently, it’s about six per cent. In 2008, it was about 3.6 per cent of the market.
According to CREB, MLS sales of properties more than $1 million reached a record 854 transactions in 2014, up from 726 in 2013 and 544 in 2012.