Festival Tower On A Lighter Note

Yesterday, I trashed the new project by Daniels Corp simply because of their ridiculous marketing brochure which features sexy bodies by the poolside in an attempt to sell condos to Toronto’s single, social elite.

Today, I’d like to re-visit the project from it’s launch, and see how you could have made over 100% per annum on your money…

festivaltowernew2.JPG

What was your favorite Jack Nicholson movie character?

Was it R.P. McMurphy in the classic One Flew Over The Cuckoo’s Nest?

Or how about his recent performance as Frank Costello in The Departed, which rather surprisingly won ‘Best Picture’ in a rather weak year?

Personally, I like Melvin Udall in As Good As It Gets since I can relate to his obsessive-compulsiveness, although I don’t throw out a fresh bar of soap each time I use it…

The good folks at Festival Tower named one of their 1-bedroom suites after Jack Nicholson; a small, 568 square foot unit that is available from floors 14 – 43 throughout the tower.

But don’t forget – premiums are $1,000 per floor!

So are we to believe that the difference in price between the Nicholson unit on the 14th floor is a whopping $29,000 for the SAME unit on the 43rd floor?  I guess so…

Here is the floor plan of the unit:

festivaltowerfloorplan.JPG

The good folks at Festival Tower waited until TIFF was in full flight to send out their sales packages for the remaining suites at Festival Tower, and their “One-Day-Only Sales Event” was held on September 19th.

It seems like only yesterday that I received the first package for the project; when I laughed at their ridiculous prices and panned the project as being over-priced and over-sold.

Two years later, I’d like to analyze the money that you “could” have made if you’d been “smart” enough to buy back in June of 2007.

The Nicholson unit was released at $326,900, or approximately $526 per square foot.

Back in June of 2007, that was a lot of money!

But when you consider that this was in pre-construction, I couldn’t justify the price any way I sliced it.  This wasn’t Yorkville, after all.

In September of 2009, the remaining Nicholson model suites were released at $471,900, or approximately $831 per square foot.

Now that is just ridiculous!

Imagine paying almost a half-million dollars for a small 1-bedroom condo?!  I would never advise it.  However, I could turn back time, I would totally advise paying the price in June of 2007!  I mean, just look how much money you could have made!

In June of 2007, the developers were asking for a 20% deposit on the property, but I’m certain that I could have worked that number down to 15%.  I usually only work with projects that take 10% down, but let’s make assumptions here at 15%.

At 15%, you’d be putting down $49,035 to reserve your spot in Festival Tower.

The price for the Nicholson unit has risen $145,000 in 25 months.

With one movement on my trusty slide-ruler, I deem this to be an annualized return of 142%.

And the property isn’t even built yet!

But therein lies the problem!

You’ve made your money on paper, which is great if you can turn that unrealized return into a real one.

If you bought shares of Bre-X at $25 and then watched them sail up to $78, you’d have a great on-paper return but what does it all mean if you still own them now?  Or if you held on to them and sold once they dropped back to say $24?

Festival Tower isn’t going to “drop” in price in the next little while, but in order to make this $145,000 paper-profit into a real one, you’d have to sell the condo.

But the condo isn’t built yet.

So when the keys are handed out and the building is registered in two years, where will prices be?

Will the “smart” people be able to get $471,900 for their Nicholson models?  Or maybe they’ll get even MORE!

Any way you look at this, I would love to be sitting pretty with my $49,035 invested in the Nicholson model back in June of 2007, and have an un-realized, paper-profit of $145,000!  Who wouldn’t?

And it’s somewhat ironic, considering the unit itself.  Scroll back up to the floor plan for a moment.

Notice that the bedroom has no window?  Oh, it has a glass wall that looks out into the kitchen, but no actual window other than the one thirteen feet away on the other side of the living room.  So you’re paying almost $500,000 and you don’t get a window in your bedroom, eh?

And how about the size of that bedroom?  10 feet by 11’2.  Hold on for a moment while I measure my bedroom for reference…

…okay so my bedroom in my meager, poor-man’s condo is 9 feet by 16’4.  And I didn’t pay $500,000 for it (but I don’t get my socks laundered by the cast of Saved By The Bell either).

Now look up at the “living/dining room.”  My question is: does that measurement include the kitchen itself?  If so, then that is a teenie, tiny space!  You’re essentially living in your kitchen!  Call me old fashioned, but I’m not a fan of this extreme open-concept as is demonstrated above.  Oh sure, they show a dining room table with four seats, but you won’t have room for that in practice if you desire to have more than a two-person couch and a 20-inch TV.

Shouldn’t you expect more for your half-million-dollars?

The balcony is a decent size at 107 square feet, and if the floor plan is somewhat to scale, I would assume it’s about 13 feet by 8 feet.  But that’s all I really have to say about the unit on a positive note…..except for the $145,000 profit, of course!

If you ask me, “Do you like this floor plan,” I would say NO.

If you ask me, “Do you think this is worth $471,900,” I would say NO.

But if you asked me if I wish I had bought the Nicholson unit in June of 2007 for $326,900, I would say, “Does the Pope wear a funny hat?”

As for the project itself, I think my sarcastic look at their marketing brochure from yesterday sums up how I really feel.

But that’s just me, and not everybody out there thinks the same way I do.

The reality is, there are tens of thousands of people in the city of Toronto who aspire to that lifestyle. 

The 30ish investment banker who orders breakfast up to his room, calls the concierge to have his car pulled up in front of the building, and asks if his pinstripe-suit is ready; there are tons of these people who NEED this lifestyle.

The snobby bitch who would rather go shopping for new sunglasses than walk her own dog; there are hoards of people in this city who have enough money that they don’t need to work, and thus they want to live in a $900 per square foot condo where servants wait on you hand and foot.

And what’s better than being affiliated with the Toronto International Film Festival – Toronto’s new, premiere, snobberie?

Okay, I think my bias is starting to shine through again…

But there ARE people who aspire to this lifestyle, and thus I deem it to be an excellent project.  This goes beyond the Yorkville lifestyle, which is really just living in the most over-priced area in the city simply to say you do…

Festival Tower offers more services and amenities than many of the current Yorkville condos.  And it’s the only condo in the downtown core where you can call down to the kitchen and ask them to bring up “two grains of salt” for the eggs benedict that they just brought up, undoubtedly served in a top-hat…

Simply put: Festival Tower is truly a one-of-a-kind condominium as far as the downtown core is concerned.  However, with Shangri-Las and Trump Towers on the way, it won’t be for long.

Keep in mind, that Festival Tower offers an “entry level” of 568 square feet so if you aspire to the lifestyle described above but you don’t have all the cash in the world, you can still get in on the ground level (which is a pun, since you’ll probably be living next to the kitchen!).

If you are confused by my feelings towards this project, perhaps it is warranted.  I didn’t do the best job of separating my professional opinions from my personal ones.

I don’t need these services, personally, but I understand that a fraction of the public does.

It makes sense to build it, since there is a need for it, but I’m not sure where the prices can go given that they’re already approaching $900 per square foot in pre-construction.

Could they rise to $1200 per square foot by the time the project is built?  I shudder to think.

If you’re an investor who made the right decision in 2007, you probably LOVE this project.

But the only reason I would advise somebody to buy in this project right now is if they have so much money they don’t know what to do with it.  This just doesn’t make sense from a dollars-and-cents point of view.

3 Comments

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  1. dogbiskit says:

    yeah, i don’t get the appeal of that unit for that amount of money. it’s a terrible layout. just plain silly. i wonder how resale will be once peeps can actually see how badly laid out and small this will be for the money.

  2. BobbyV says:

    great read as usual ……. however, i have to disagree, nobody who is sane would pay more than $360,000 for a 568 sq ft 1 bdrm with no parking/locker in that area (And that includes a $40,000 premium for being associated with the TIFF hoopla).

  3. earth mother says:

    I don’t like the floor plan at all — the long hallway; no breakfast-bar or separation of kitchen and living space — does the TV hang on the kitchen cabinets??

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