Construction of downtown Calgary condo put on hold

Construction has ground to a halt on a major condominium development in downtown Calgary because of the rising cost of building in the city, the developer said Friday.

The Gateway Midtown project, located on the corner of 10th Avenue and 4th Street, is just a hole in the ground so far. The two-tower development was to have 650 units.

About 500 unitshave already been sold, with prices starting at $269,900

Shael Gelfand, who speaks for Resiance Corporation, the developer of the project, said Friday that the project's construction costsgot out of control.

"Construction costs and materials and labour have escalated to the point where the project is not feasible right now," he said.

The development ran into trouble last year, as well,and buyers were asked for more money, Gelfand said.

Buyers have shelled out tens of thousands of dollars as deposits on the project, but Gelfand said they can get their money back if they want.

"I want to say how regrettable it is, the impact that this will have on our purchasers, on our suppliers and contractors and on our employees. This is a really tough time," he said.

"But it is really important for all purchasers to know that their deposits are fully protected. They're being held in trust at a law firm, and they're also protected under the provisions of the Alberta new home warranty program."

Clay Hamdon, with competing developer, Cove Developments, said rising costs could become a problem for other developers, as well.

"Well, it's hard to say if there will be more properties like this in Calgary. Certainly, the costs have risen in recent times to a place where it has become more difficult," he said.

Hamdon's company has offered investors in Gateway Midtown the option of transferring their deposits to one of its developments.

"We are offering the opportunity to allow these people to invest in a condominium project, and hopefully, retain the value of their deposits they may have put down on the Gateway Midtown project," Hamdon said.