Toronto's Condo Boom Continues after Record 2011
By Susan Pigg
If the recently launched INDX project in the heart of Toronto’s financial district is any indication of the state of the city’s condo market, then this year could prove to be even more bullish than last as the core continues to creep toward the heavens.
INDX is among some 27 new condo projects that have launched just since January across the GTA. That’s up from 17 during the first three months of 2011, according to market research firm Urbanation — and that turned out to be a record year for the condo industry across the GTA, far outpacing all predictions.
With condo developers still heady from last year’s 28,190 new sales, and 24,343 starts, there appears to be no letup in sight.
INDX created such a frenzy of interest during a VIP sales event last week — some 600 realtors showed up, causing a more than hour-long wait to get cars back from valet parking — that almost 70 per cent of the 798 units are already sold out.
Despite concerns — even by federal finance Minister Jim Flaherty — that Toronto’s condo market may be headed for a fall, buyers appear to be turning a deaf ear. That’s because fundamentals of the market remain as solid as ever, developers say: strong immigration to the GTA, low interest rates and a growing desire to live close to work.
And you can’t get much closer than the 54-storey INDX, a block away from First Canadian Place in the Bay and Adelaide area. The sleek tower, abutting the historic Graphic Arts Building, will feel more hotel than condo if all goes as planned with cocktail lounges, a golf putting and poker room, as well as its own movie theatre and shoe-shine station.
“To characterize the market as crazy or a bubble is not an accurate description of where we’re at in this city,” says Andrew Hoffman, president of CentreCourt Developments which has partnered with Lifetime Developments on the unique project — a rare residential tower steps from the banking district at less than half the price ($250,000 to $900,000) of the nearby Trump International condo units.
“As long as interest rates are low, our economy is strong and we have people who want to live close to work, I think the condo market will continue to be strong.”INDX is among a flurry of projects being rushed to market sooner than usual, hoping to keep up momentum from last year’s record level of sales and beat out competitors, especially in the core where some 14 projects have already launched and others are about to go to market, says Urbanation’s Ben Myers.
They include Massey Tower by MOD Developments which will stretch 60 storeys into the sky over a historic beaux-arts style CIBC Bank building on Yonge St. north of Queen that has been vacant since 1987.
Tridel is preparing to launch its much-anticipated 75-storey Ten York condo near the waterfront. And a host of other condo projects still soon start transforming the feel and foot traffic along Yonge St., says Myers.
Much of the demand is being driven by investors or young buyers backed with downpayments by parents, he adds.
“I don’t see the bubble everyone is talking about. We’ve seen no slowdown from investors,” says realtor Roy Bhandari, part of a four-person Sotheby’s International team that focuses largely on preconstruction condo sales and sold 45 units in INDX within days of the project being announced.
“If anything, people are more eager right now. They still see (the Toronto condo market) as a great place to put their money, especially when you weigh it against other investments like stocks and bonds.”
Most of the investors Sotheby’s sees are immigrants now living in Canada, looking to hold onto units for at least two years and rent them out, even if the escalating costs and shrinking size of condos is making it harder to break even on rents.
As what Hoffman calls the “live hard, play hard” crowd looks increasingly for downtown addresses within walking or subway distance of work, demand for condos, to rent or buy, is actually close to outstripping supply, despite the condo boom, says Bhandari.
Downtown realtor Mark Savel says he’s seeing more bidding wars for prime downtown rental condos, even at $1,900 a month.
“There’s a sense that buying a condo downtown is almost a recession-proof investment,” because demand to live downtown is so strong now, says Savel. “I don’t see why we can’t handle another record year.”
Bhandari agrees, stressing the issue isn’t overbuilding in the GTA but, rather, the dramatic shift in what’s being built now because of provincial greenbelt policies — soaring highrises rather than sprawling suburban homes.
“Toronto is still a brand new city compared to other major cities like London and New York,” where that intensification took hold decades ago, says Bhandari.
“Everyone sees all these cranes and gets scared, but this is just the city catching up to where it needs to be.”