Decades ago, Toronto capitalized on political instability in Quebec to supersede Montreal as Canada’s economic powerhouse. While Montreal is unlikely to regain that mantle, it’s returning the favour and poaching many would-be Toronto- and Vancouver-bound foreign real estate buyers.
Of course, the reason largely has to do with the foreign buyer taxes imposed in Toronto and Vancouver, where they’re 15% and 20%, respectively. But the French-Canadian metropolis is also in the midst of a renaissance, and nowhere is the manifestation more obvious than the myriad cranes in the city’s sky.
“We even saw it before the levies in Toronto and Vancouver,” said Anthony Coletti , vice president of M Real Estate. “The levies definitely affected it more positively for us. When you talk about foreign buyers, they aren’t necessarily just from one place. We’ve seen a large influx of people from the Asian market; they seem to favour Canada more than anywhere else, but when you add those 15% and 20% taxes, well, we don’t have that in Montreal. The only taxes we have in Quebec are the PST and GST.”
Levying taxes like the ones in Toronto and Vancouver have a psychological effect on investors because they interpret a peaked market with nowhere to go but down.
“Usually when people put a tax on something, it slows down the frequency of whatever that activity is,” said Coletti. “It creates a psychological effect for people buying. That’s what I’ve heard in the conversations I’ve had with investors coming to Montreal. The other markets have either peaked or they’re capped and the government is trying to peel them back.”
Montreal has among the most students per capita in North America, and with four on-island universities—McGill, Concordia, Université de Montréal, and Université du Québec à Montréal—and Université de Sherbrooke’s Longueuil campus on the south shore, accessible by the city’s Metro system, international students are, increasingly, becoming residents in the city’s new cadre of condos.
But not everybody from abroad who buys Montreal real estate is an investor. A growing number are end-users.
“A lot of people come from overseas, from China mainly, and they come here because of the good universities,” said Coletti. “The suburbs have good high schools and private schools. There are lots of people coming from overseas who will rent at a premium to be closer to the schools. McGill and UdM (Université de Montréal) are considered the better schools in Montreal.”
Most purchasers of real estate in Montreal are locals for whom the city’s rejuvenation is palpable.
“There are more local people investing than foreign people,” said Coletti. “A lot of people who have seen what’s gone on in Toronto and Vancouver are reaching out because they see real estate as a good opportunity, and they’re seeing what’s happening in Montreal. Infrastructure is getting completely overhauled. That shows growth in a city. A lot of different industries are coming here, and that’s something we haven’t seen in a while.”
Brad Henderson, Sotheby’s International Realty Canada’s president and CEO, noted Montreal’s political stability has turned the city into a safe bet and that carries more significance with domestic buyers than international ones.
“It’s more domestic buyers than foreign buyers, or even buyers moving from other provinces to Montreal,” said Henderson. “What we’re seeing is political stability in Montreal coupled with the fact that, compared with Toronto and Vancouver from an affordability perspective, it’s a comparative bargain.”
Henderson says that the policies put forth by Montreal’s new mayor Valérie Plante could influence how momentous the city’s ascension remains.
“It’s too soon to tell. There’s some concern over what she might do, but there’s also a feeling that her narrative may be more bark than bite. I think anything that affects business confidence will have the equal effect on consumer confidence because the two are very closely aligned. Everyone is waiting to see what she and the government do and if it is going to be anywhere near as dramatic as the campaign trail. More times than not, it tends to be more muted when they get into power.”