Newer is Better, Right?

With several dozen new condos expected to launch over the next 60-90 days in Toronto, the question for investors is quickly becoming: Which one(s) do I invest in? If you believe the prevailing message of the condo marketing machine, newer is always better. That is, getting into a condo at the earliest stage is always better than buying at a condo whose launch period has passed. I have to disagree.

The condo industry is driven by hype, and when something is shiny and new, and relatively unknown, hype is never in short supply. And of course, once something is a known commodity and the ‘newness’ of it starts to fade. Developers know this and many have taken to the practice of multiple launches in the form of VIP launches, preview openings, grand openings, etc. However, just because a project is no longer the latest and greatest, doesn’t mean investors should write it off as an investment opportunity.

This week this point was illustrated perfectly when I observed a new condo being launched to much fanfare and excitement while another existing project quietly released some new units. In my analysis, the new project is not worth investing in while the old one provided an excellent buying opportunity.   In fact, two of the best buying opportunities in my opinion so far in 2011 for downtown condos have been from “old” projects who have offered a “new” promotion. One was at 12 Degrees, and the other was just this past week at DNA3 when they released 2 additional floors of suites.

So what is the best condo to invest in? The answer is the one that offers the best value compared to everything else on the market. I measure value by comparing the location, price, and features of one project vs. the next. Sometimes the newest condos offer the best value, because prices are often lowest at initial launch, but often times these new launches only serve to further highlight that existing projects offer better prospects for return on investment.

Questions or comments? Ready to buy a condo this fall? Contact me.