A new release of lots at Rossland’s Red Mountain Resorts Inc. underscores the shifting strategies required to make resort development work in the current economic environment.
While interest from Vancouver and Calgary has taken over from U.S. buyers in the past year, Howard Katkov and the development team that acquired the site in 2004 are keenly aware of market limitations.
A golf course planned for the mountain won’t be proceeding, for instance, because Katkov has rejigged his vision for the property in light of unfavourable financing conditions. He is, however, releasing 80 pre-fab “single-family cabins” in a corner of Red Mountain’s Caldera neighbourhood.
The new homes, being marketed under the name “Elevate,” aim for a price-conscious buyer. Caldera was hit hard by the downturn in recreational real estate. Half of the 18 buyers in Caldera’s initial subdivision backed out.
Those lots are still on the market, but Elevate aims to deliver homes in the range of $150 a square foot, versus $400 a square foot in Slalom Creek, a 67-unit condo development that anchors the resort. Many of the expansive Slalom Creek units were sold off at $225 a square foot, $100 a square foot below the cost of construction.
Jim Greene, who oversees real estate for Red Mountain, said the lower selling price illustrates the woes resorts have encountered but also that a market continues to exist for resort real estate – if pricing is right.
Ultimately, Katkov expects Red Mountain to boast 1,400 residential units, though fewer than 100 have been built to date. He admits he won’t live to see the project built out. Indeed, distance from major centres ensures a slower, more organic pace of growth that gives the lie to residents’ fears of a sudden flowering.
The biggest change to the former community-owned ski hill so far, in addition to Slalom Creek, is $2.8 million in renovations to the hill’s 110-year-old clubhouse. A 120-person conference centre has been added to the resort, increasing business opportunities in a region long dominated by resource industries.
Remoteness is a strength of the Kootenays, so far as locals are concerned.
While it’s popular with visitors from Alberta, and Spokane is a two-hour drive away, Red Mountain sold just 3,000 lift tickets on its busiest day ever at the end of December 2010.
Talk with locals in Rossland and at NewKey’s Place, a pub and RV park at Crawford Bay on the east side of Kootenay Lake, made clear that locals choose to live here. It’s largely about the lifestyle, whether recreation, rusticity or remoteness is the drawing card.
While a waterfront lot on Kootenay Lake can still fetch $500,000 to a $1 million, according to Scott Veitch of Century 21-Veitch Realty in Creston, there’s plenty of choice for buyers and a range of communities to choose from. Cranbrook and Trail may offer working-class, employment-oriented people a home, while Creston is popular with retirees. Rossland and Nelson offer funky downtowns in a pristine environment more popular destinations such as the Okanagan have lost.
The key for investors is having a vision of what’s possible.
“Our sales are way down. Will they come back? Yeah,” Veitch said. “There’s huge opportunity for somebody that can come along here and go, ‘Hey, here is what I think can happen.’”
Veitch sees the Kootenays gradually being in the path of development as cities such as Kelowna and Cranbrook grow and local resorts gain traction.
“The future of the Kootenays? It’s nowhere but up,” he said. “With social media and all that stuff, why can’t it? It’ll go viral at one point.”
Real estate in places such as Trail is benefiting from major investments in local infrastructure, however. Upgrades to the Zellstoff Celgar LP pulp mill in Castlegar, the addition of metal recycling to Teck Resources Ltd.’s activities in Trail and Columbia Power Corp.’s expansion of the Waneta power plant (also in Trail) are helping boost local employment and driving demand for housing. Rossland, meanwhile, has attracted professionals seeking a convenient distance from Trail’s working-class ethos and proximity to the amenities of Red Mountain.
Recreational real estate and tourism opportunities may be helping the area diversify beyond the resource sector, but traditional industries still drive the local economy.
While resorts are the sole projects on hold in the Kootenays, according to the province’s latest summary of major projects, power generation, mining and infrastructure projects dominate the $6.8 billion worth of major projects planned or under construction in the region.