Real estate: GTA condo chill reaches cottage country 

The GTA’s pre-construction condo slump is echoing into cottage country as a conspicuous quieting in new resort-style development. 

A telling example surfaced recently on Sparrow Lake in Muskoka, where a 50-plus-acre Gravenhurst property approved for a 60-unit luxury resort community recently hit the market for just under $11 million. The former Delmonte In the Pines Resort site had been marketed by locally-based MDM Developments as Luna Bay, a resort-style enclave with three-storey waterfront townhomes, 60 boat slips and roughly 20,000 square feet of amenities. Now, that plan appears to have been scrapped. (MDM could not be reached for comment.) 

During the pandemic-era cottage boom, a wave of resort-style projects and recreational condo and townhome concepts responded to surging demand across cottage country. Today, many have yet to launch sales: Summerside Towns at the Oak Bay Golf & Country Club in Port Severn, Mundy’s Harbour Towns in Midland, and Aspen Shores in Meaford, among others. The Bluepoint Lookout condo project on Lake Huron near Sarnia, meanwhile, is reportedly being sold under power of sale.   

Kirby Hall, the owner of Parry Sound-based Hall Construction, is seeing the slowdown on the ground. “I think the contemplation and early-stage development is happening, but sales appear to be drying up.” 

While the GTA lull is being driven by factors ranging from softer resale values and higher borrowing rates to elevated construction costs and diminished investor demand, its cottage-country counterpart is a different beast, says Kelly Fallis, a sales representative with Chestnut Park Real Estate Limited in Port Carling. “There are two main factors at play. In the typical freehold cottage market, you’ve got zero inventory, so there is very little waterfront land to build on. Coupled with local building bylaws, that’s where a lot of pre-construction plans are going sideways.”  

Historically, she explains, an owner with a large stretch of shoreline might have been able to sever a lot and sell it. Today, minimum frontage requirements, lake-specific rules and stricter planning constraints make that increasingly difficult. “It’s extremely hard to create new lots on any body of water, and that’s flattening pre-construction planning.” 

Describing new condo and resort-living projects in today’s recreational markets as “very quiet,” Pauline Aunger, broker of record with Royal LePage Advantage Real Estate in Smiths Falls, says the COVID-19 pandemic continues to impact the preferences of cottage buyers. “I think the dream for most waterfront people today is to find a site that is all theirs, as opposed to something they’re sharing.”  

Several apparently stalled projects were built around an appealing idea: low-maintenance cottage ownership. In a region where storms, flooding, repairs and seasonal upkeep can become a full-time concern, resort-style projects offered a simple pitch: buy the cottage experience without taking on all the work. “For a lot of people, maintenance is the selling feature,” Fallis says. The pitch, she adds, was essentially: “We’re going to do it all for you. We’re going to provide the gardener.” 

Projects also tended to lean on the promise of rental income. Owners could use their units when they wanted and place them into a rental pool when they were away. On paper, that model addressed a real concern: the cost of owning a cottage that may sit unused for long stretches. In practice, Fallis says, the operating side can become complicated. “A lot of the sales pitches are about these turning into owner-operator situations,” she says. “But the operator part is where it can fall apart, because the management isn’t strong.” 

Financing can be another hurdle. Resort, fractional or non-traditional ownership structures may not qualify for the same lending treatment as conventional real estate. “Even with a property like Touchstone Resort, which has been open in Muskoka for a while, it’s not easy to get financing on new units,” Fallis says. “If you’re doing fractional ownership — say, $150,000 for eight weeks — you can’t necessarily finance that. You have to be sitting in cash to do it.” 

Then there is the local politics of development. Some developers underestimate the resistance they may face from municipalities, lake associations and long-time cottagers concerned about traffic, density and pressure on the water, Fallis says. “I don’t think developers always anticipate the public opposition, and that can really bog them down.” 

Not every project is stalled. The Nest, for instance, was initially planned as a condo development before shifting to a 174-home freehold community in Seguin Township near Parry Sound. Developed by Hall Homes — a subsidiary of Hall Construction — the pre-construction community suggests one possible path forward for recreational-region development: attainable housing near cottage-country amenities, rather than luxury resort ownership directly on the lake. 

The project’s shift reflects both buyer appeal and business practicality, owner Kirby Hall says. “A condo requires enough presales to launch and then commits the developer to carrying the project through to completion. With a freehold development, the developer has a lot more flexibility once it’s approved.” 

The condo business model can also create carrying costs for the developer. Hall says that with a condo project, the developer may remain responsible for condo fees on unsold units until they are built and sold. While condos can offer advantages, including higher density and lower infrastructure costs, he says the model “comes with some hair.” 

He also believes the psychology of Toronto’s condo market is likely influencing buyers outside the city. “They’re two totally different markets, obviously, but that whole condo situation in Toronto is going to reciprocate into other communities to some extent. People seem a little more cautious about buying into a condo regardless of where it is located.” 

Fallis does not dismiss condo resorts entirely. Smaller, better-calibrated concepts may still work, she says, particularly if they are realistic about pricing, financing, amenities, local approvals and operations. “If somebody were to make a run at it with a smaller resort, I think that would probably be achievable and interesting,” she says, adding that some of the larger proposals may simply have been too ambitious for the market and the setting. “Some of these projects, like Luna Bay, are massive.”