A $90M debt and a 25% price cut: What a rare Kerrisdale foreclosure sale says about B.C.’s condo market

The four-storey Chloe condo project off Vancouver’s Arbutus Greenway was once marketed as a boutique, Paris-inspired luxury residence. Now, less than a year after completion, it’s become one of the city’s most closely watched receivership cases.

According to reporting by the Vancouver Sun, the developer, Lightstone Development, owed more than $90 million in secured debt when court-appointed receivership proceedings began in February. The Chloe, at 2096 West 47th Avenue in Kerrisdale, includes 46 strata units and 11 retail units. Despite the building being fully constructed, 24 residential units and nine retail spaces remain unsold.

That makes the case highly unusual, says Vancouver real estate agent Suraj Rai, who is following the proceedings closely. “Rarely do you see a completed building going through foreclosure, certainly not in Vancouver.”

 

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A steep price adjustment

Rai says the remaining units will be marketed in the coming weeks at prices ranging from $750,000 to $2 million, or about $1,500 per square foot on average. That represents roughly a 25 percent drop compared with the $2,100 per square foot that presale buyers agreed to pay several years ago.

“The pre-sale selling price was at the ‘high-times’ of real estate, when people thought it would never come down. Now, it’s back down to earth. Though $1500/sf is by no means cheap.”

Rai explains that the debt on the project is “piling on at $16,000 a day,” adding that the court documents specifically say that the receiver intends to move the units out without delay because of said debt.

Who’s buying?

Despite the cloud of receivership, Rai says demand has been strong. “I’m getting a ton of calls, emails, texts, and DM’s on this, and it’s all end-users.” He predicts the units will not linger: “I think they’ll all be gone in 30 days from formal listing, max 60 days.”

What it means for the market

The Chloe is not an isolated case, Rai cautions. “There’s lots of foreclosures and receiverships, and I’d bet dollars to donuts, there’s more on the way.”

While he doesn’t believe the sales will reset benchmarks for completed units in Kerrisdale, he says presale pricing—already under pressure—will take another hit. “The only pricing benchmark that may be affected is pre-sale pricing. And that was taking a beating anyhow.”

The cycle, Rai argues, is familiar: “There’s definitely stress in the condo market. If a project is too far to stop—already under construction or financing in place—then it will move forward. Otherwise, it’s being halted. It’s really just a normal cycle: Supply is high. The market drops. Building slows. The supply gets eaten up over time. Supply is low. The market goes up. Builders build again.”

For buyers, Rai says the key lesson is to look closely at the developer behind any presale purchase. “Every time I have someone interested in a pre-sale, I say: ‘The most important question is who? As in, who is building it?’ This project would have failed my ‘Who’ test. They were an unknown developer and that’s a risk.”

Still, he emphasizes the quality of the finished product. “I want to make this clear: They failed financially. But the building is absolutely gorgeous on the inside. They failed because they spent too much, making it too nice, and the market flipped on them.”