Lately, there has been a great deal of speculation in the media about the imminent collapse of the condominium market in Toronto due to over building. I read a few articles in the last few days that support a different opinion. Marcus Gee from the Globe and Mail thinks “the condominium boom is the best thing that has happened to Toronto in a generation.”
November’s Toronto Life presents hard core facts to justify the condo boom and to boost our excitement about it. It reported that the pace of population growth in Toronto is accelerating and that it will spike 50% by 2036 to 9.2 million. Toronto Life says that “The New Elite” immigrants are “affluent, hyper-educated professionals flocking to Toronto from all over the world. As the global economy fizzles, our city is being inundated with a hyper-educated cohort of foreign professionals. They are coming for the stable economy, the chart topping livability and the promise of a steady job. Toronto Life calls these people “the new refugees”.
So who is buying all these new condominiums? Toronto Life reports “the condo explosion is fuelled by wealthy buyers from Russia, China, the Middle East and the highly educated “new refugees” coming to Toronto for a better life. International investors are buying a pied-a-terre for business trips or as a home base to help them apply for residency”. Furthermore, Canada has lured international investors by making the process of buying a property less onerous than in many other countries.
The concern is – what happens to the condo market if these investors pull out? Toronto Life reports that investors coming from emerging markets where residents are eager to escape corrupt regimes are looking for asset protection rather than growth. “They are even ready for some loss as long as the bulk of their principal remains safe”.
If you’re a condominium investor or owner you want to know where the Toronto condo market is headed. Do you believe the pundits that are always trying to predict the timing of the next crash OR do you believe in hard core facts about changing demographics sustaining the condo boom?
Regardless, there is smart criteria you can apply when deciding to buy or invest in a condominium that can better protect your investment. Buy good quality construction from a reputable builder, buy in an “up and coming location” where the appreciation will be sustained by the area’s growth. Buy a unique space in a unique building instead of cookie cutter condos that are a dime a dozen. Buy close to the subway line and buy spaces that can accommodate “the new elite refugees”. Young professional families coming to Canada from other countries may be used to small spaces, so an 800 square foot two bedroom two bathroom condo in the city may be enough space for them.
Mostly I share Marcus Gee’s excitement that the condo boom has revived and revitalized our urban spaces by bringing more people to the downtown core giving life to areas like The Distillery District and Liberty Village. But I AM concerned that Toronto’s infrastructure is inadequate to support the current expansion and this problem needs to be addressed with more urgency.
So as our population grows to the predicted level of 9.3 million people, there is no doubt the demand for smaller urban spaces will become greater. But, long term, the success of this condo boom will depend on how the city addresses the infrastructure that is necessary to accommodate the growing poupulation in its city core. In the short term, though, low interest rates, high immigration and down sizing baby boomers will keep the bottom from falling out of Toronto’s softening condo market.