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Inflationary woes are not just making Indian developers dreary; the same trend is playing out in Canada as well.
Sample this: Hazleton Development Corporation got its CCAA safeguard on 20th April this year. Wondering why? One of its projects has filed for insolvency.
Zooming In
A project marketed as a Highlight of Mississauga is now facing inflationary blues, despite the fact that 261 out of 265 units are already sold out in the Dixie Road project.
Construction began in September 2019. With the completion date pegged at 30th April, 2021, the four-month delay didn’t seem much. Yet, the trend seems to be infectious. Greater Toronto developer group BILD found almost 4 out of 5 projects being delayed by at least 3-6 months each.
The filing indicates only a partially finished venture with completion at risk. Reasons include restrictions, shortages of supply, labour, and higher costs of services and goods.
📈 The original project estimated to cost CAD101.18 million to build, has since leapfrogged to CAD113.70 million - an increase of 12.4%.
Crux Of The Matter
🎯 Building costs have gone up by roughly 35.1% from Q4 2019.
🎯 Developers are now going back to their customers to ask for more. Even CAD100,000 or higher at times.
🎯 Project insolvency filings could go up even more, as projects often sell in advance before construction, without considering inflation.
🎯 The Government’s mission to double construction has boomeranged for obvious reasons.
12.4% Cost Inflation? - 🤷♂️ - Indian builders.