It is a popular summer destination for both Vancouverites and those Albertans from Calgary and Edmonton. Like Vancouver, it has it's share of multi-million dollar homes - and a real estate boom just as bubblicious as the Village on the Edge of the Rainforest.
In the heart of Kelowna, on Springfield Road, is a new 14 storey luxury hirise called Invue. With walls of windows, pointed balconies, a desirable proximity to Orchard Park mall and varying sizes of units; it has all the elements which the developer figured would enable the building to be marketed as a desirable address in a highly desirable BC city. It other words... an easy sell.
And making this particular development even more significant is the recent hiring of a marketer to promote the building... none other than the infamous Vancouver condo king, Bob Rennie.
Originally the target market for this sale was to be Albertans and Vancouverites looking for upscale vacation, retirement and investment homes.
But as we have noted in recent posts, the real estate market has swung dramatically. And sensing what is coming on the horizon, Rennie has been brought in to dramatically shift focus.
The new target strategy? Locals first. Then those Albertans and Vancouverites who are returning, post-recession to the Okanagan, looking to find bargain-priced second and investment homes.
And the key here is 'bargain-priced'.
Recognising the shifting sands, Rennie has sold the developers on a marketing strategy that has, at its core, slashed prices. And we mean SLASHED prices... by a stunning 40%. (Recall that Rennie is also marketing the Olympic Village in Vancouver, a campaign that saw 36 units sell in the first two days but has stalled with no further sales after five weeks).
Unit 707 at Invue - a 1,011-sq.-ft., two-bedroom condo on the seventh floor with nice views - is now for sale for $298,000, down from $440,000.
Unit 1406 - a 1,231-sq.-ft., two-bedroom on the 14th floor with stunning views - has been reduced from $625,000 to $419,000.
And the penthouse, a 2,400-sq.-ft., three-bedroom with loft beauty, is now $1.2 million, down from $1.8 million.
Recently Rennie mingled poolside with realtors and media on Invue's rooftop terrace in a promotional shindig. And Rennie let everyone know that Invue is serious about selling out at dramatically reduced prices.
"The reality is even if you have an architectural icon and an A-inventory building like Invue, pricing has to be repositioned," said Rennie. "This is not 2007, and Albertans are not buying over the phone just because it's a condo in Kelowna. The economic collapse eroded consumer confidence and that means people are only going to buy if the price is right and the home makes sense by being the proper size and having the proper layout, being close to shopping and transportation."
Rennie's job is to sell the 80 of the unsold units in the 96-unit Invue. So far, in a recent 18-day period, he has sold 14 units at the reduced prices (16 sold as pre-sales). And while Rennie has almost doubled the number of units sold in the project with the 'slashed prices' approach, 66 remain.
"To be truthful, we were in a bind," said Invue developer Adrian Block of The Rykon Group of their dismal performance in only selling 16 units at 'full' price. "The economy has changed and we have unsold condos and it costs money just hold onto inventory."
Block said in many ways the drastic action taken at Invue is simple economics.
"The marketplace ultimately sets the price," he said.
"We made the hard decision to meet the marketplace on price rather than wait for the marketplace to come up to our original pricing."
What about the Invue buyers who paid premium prices during pre-sales back in 2007 and are moving in as this clearance sale goes on?
"It's hard on them and it's hard on us," admitted Block. "Those buyers who paid full price bought during a different economy."
Think about that for a second. The pre-sale buyers have had to go commit to their new mortgages just recently and then... just days after committing and moving in... they are advised that the spiffy new units they just acquired had depreciated a stunning 40% - overnight! - with no guarentee that they won't drop even further.
The marketplace is shifting, the economy has already shifted, and in Kelowna developers are cutting their losses and 'gettin the hell out of Dodge.'
One wonders how long before these shifting sands of 'simple economics' hit Vancouver real estate.
If a 40% reduction is just the first stage... how bad could this get?
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