“The condo market is reliant on the investor-buyer,” said Jim Tadeson, founder of Carttera, during a panel discussion at the Land & Development conference in Toronto Tuesday. “If they went away, we’d be in trouble.”
The presence of foreign real estate investors and their impact on Canada’s housing market has been a hot topic this spring, especially in Vancouver.
The city’s mayor, Gregor Robertson, has suggested that there should be higher provincial taxes on luxury homes and a speculation tax on investors, though both measures were rejected by Premier Christy Clark, who believes the city’s development fees are to blame.
A new report, which was commissioned by the city and published this week, concluded that Vancouver has simply become “part of the global real estate market” and attracts investment from foreign, as well as domestic, investors, and local homebuyers.
Condo developers are happy that foreign investors are in Canada. “We’re still a global safe haven, and in terms of product offering, there is a lot of variety for investors,” said Alan Vihant, senior vice president of high-rise at Great Gulf Homes. “Capital appreciation is not what it once was, but there are still a lot of opportunities.”
While there are currently more than 50,000 condos in development in the Greater Toronto Area, and significant projects underway in Vancouver, analysts believe that foreign investors accounts for less than five per cent of buyers.
“This is certainly the case in the projects we’re developing,” added panel member Jim Ritchie, the senior vice president of Tridel Corporation.
Members of the panel also pointed out that Toronto’s condo market is mainly made up of millennials and investors, with many of the millennials who can’t afford to become first-time buyers choosing instead to rent from the investors.
“Investors kick-start a project, so we need those investors today,” said Jared Menkes, vice president of high-rise residential at Menkes Development. “Investors front end it for the end-user.
They are sophisticated buyers – they know the market, the numbers; they’re at the forefront.”
Toronto’s condo market needs investors to continue to thrive, particularly foreign ones, argued developers at a recent Toronto event.