On any given day on your drive from home to work, watching for a condominium sales centre to rise from the asphalt or counting the cranes there are sprouting throughout the city , has become this city’s norm, It’s a market that’s the envy of cities across North America , Europe, Middle East, Hong Kong and mainland China, India, Pakistan, Russia and Brazil, attracting international investment that a few years ago would have migrated elsewhere, especially south of boarder to the US.
there were 132 high-rises under construction in toronto, almost 68,000 new units across the GTA in September, far ahead of North American Cities such: New York, Chicago and Miami. In addition, there are about another 120 projects in pre-construction.
So why is Toronto, the hottest condominium market in North America?
Among the reasons, say industry analysts and insiders, is that the Canadian economy was unscathed by the World Financial collapse of 2008. The housing market in particular proved resilient, unlike the housing market meltdown south of the border.
Earlier this month, U.S.-based Forbes magazine ranked Canada as the best place on the planet to do business. The U.S. came in 10th.
The City of Toronto as the economic hub of the country, accounts for 20 per cent of its GDP, benefits greatly from such global attention as Canada, is considered as a safe haven for foreign investment, Federal immigration policies continue to attract large numbers of new immigrants, migrants with assets, most of whom are drawn to the big cities, in particular Toronto.
An estimated 100,000 new residents move into the greater Toronto area each year, many jump quickly into a housing market, that despite rising prices, is still a bargain by international standards.
With a market that in recent years has appreciated 8 to 11 percent annually, even the smallest units are an attractive investment: bought pre-construction, they’re worth considerably more by the time they’re built. It’s estimated that fully 60 percent of the units sold in the Toronto market are snatched up by international investors, many from South Asia, Middle East, Hong Kong and mainland China, India, Pakistan, Russia and Brazil, looking for solid investments .
As Toronto’s pre-construction condo market continues to break sales records, a record 20,729 units have been sold in the GTA as of the end of September, smashing the pre-recession record for the same period in 2007 of 17,285. With estimated 50 to 60 per cent have been snatch up by investors, with estimates closer to 80 per cent in some newer downtown condominium projects.
The Toronto Real Estate Board’s mid-October report showed condominium sales in the city were up 16%, while average prices were up 10% to reach $369,528.
While the Canadian Real Estate Association (CREA), reported 1,870 condominiums sold in Toronto in September, up 23 percent from a year earlier, the average price climbed 9 percent to $330,500.
In May, a 9,000-square-foot penthouse sold for $28 million ($27.5 million U.S.), that include a 1500 square-foot 2 Bedroom unit for the Butler, a record for a Canadian condominium, to an undisclosed foreign buyer. The penthouse sits atop a residential complex that also houses the new Four Seasons Hotel, one of the world’s foremost luxury chains.
luxury giant Shangri-La offering what it calls “private estates from $2.9 million” at its mixed-use project, and Trump tower are scheduled to open in 2012.
A 53-storey Ritz-Carlton, with 159 “managed condominiums” opened its doors earlier this year.
Of greater concern to many are fears where prices will end up, that the market will eventually overheat and collapse, but industry analysts have wondered when this boom is going to run its course, and been predicting for years the end of the Toronto boom, but so far they’v been wrong.
Bank of Canada Governor Mark Carney warned earlier this year that too much inventory could lead to “the possibility of an overshoot in the condominium market" in Toronto.
The Toronto condominium market appears to be overheating and could soon be flooded with excess supply, says a new report from Bank of America Merrill Lynch Global Research.
But Shaun Hildebrandof Canada Mortgage and Housing Corp.’s senior market analyst for the Greater Toronto Area, said several factors suggest the risk of a correction is overblown despite the record number of condo completions in the works for this year and next.
For instance, more than 95% of units completed are sold, he said, leaving little risk of rising unsold inventory. High-rise construction is also picking up the slack left behind by a drop in low-rise construction (such as singles, semis and row houses), he said. “We’ll be looking more toward condos to ensure we keep up with household formation.”
Recent media report of bidding wars for rental listings mean that the condo rental market is extremely hot.… There is great demand for rental units and that’s why investors are purchasing,
we have the one key ingredient that has fuelled virtually every other asset bubble in history, a market driven by a large number of investors/speculators who are buying aggressively because they simply believe prices are going to continue to rise, You can’t always draw the same conclusions from other markets.
But this market investors/speculators, are very sophisticated and recognize Toronto as a bargain compared with other major cities in the world, bear no relationship to the speculators of the 1980s, these investors have become essential landlords for first-time buyers who can rent while saving up a down payment, in a city where almost no one is building residential rental apartments.
A condominium market that most analysts say will continue to be supported by low rental vacancy rates and strong investor demand where demand continue to rise.
Most of the key indicators in the Toronto condominium market right now are positive, so there really shouldn’t be any talk about corrections or bubbles or anything like that
If it wasn’t for the multicultural community, we would have no condominium market to speak of right now in Toronto,
For such a market, it’s a great place to be.