Is Canada the New Switzerland? Safe reputation abroad seen driving Toronto’s condo boom
Canada’s reputation as a safe country to live and bank is luring buyers from abroad and driving the housing boom in Toronto.
The city of 2.8 million attracts about a quarter of the 250,000 immigrants who arrive in the nation each year. That’s helping drive demand for new housing, including condos and rental properties, property Developer Sam Mizrahi, said at the Bloomberg Economic Series Canada summit in Toronto,
“Immigration keeps the market buoyant,” said Mizrahi, president of Mizrahi Developments. “Canada’s seen as the new Switzerland.”
Developers in Toronto are building 97 residential towers — some as high as 92 stories — more than any other city in North America including New York City, according to data compiled by Emporis GmbH. The developers, and the city’s chief planner expect condominium construction to continue as employees flock downtown for jobs, restaurants and entertainment.
The city is a target for local and international doomsayers. Fitch Ratings Inc. said housing prices in the province of Ontario are 25 per cent overvalued and condo market prices may decline as much as 10 per cent.
“Every year there’s doom and gloom about how there’s about to be a bust,” said city planner Jennifer Keesmaat. “We do not have a market based on speculation. We don’t have empty buildings.”
Keesmaat is responsible for planning the city and overseeing the review of at least 3,000 development applications the city receives each year.
Canada’s political and economic stability have strengthened housing demand from overseas investors, said Mizrahi. The country’s banks have been ranked the world’s soundest for seven consecutive years by the Geneva-based World Economic Forum.
Canada’s gross domestic product may expand by 2 per cent this year and could accelerate to 2.5 per cent next year, trailing the U.S., Royal Bank of Canada Chief Executive Officer David McKay said earlier at the Bloomberg conference.
The supply of high-rise homes may not be meeting demand, with number of unsold units under construction dropping 9 per cent to 7,059 units in the first quarter, according to Urbanation Inc. Prices rose 2 per cent to $562 a square foot in the same period from the year ago, the data provider said.
Almost half of Torontonians were born outside Canada, making it one of the most diverse cities in the world, according to the municipality’s website. Chinese speakers are the most numerous among recent immigrants, followed by Italian, Punjabi and Tagalog speakers.
Municipal leaders need to ensure the city remains an attractive place to live amid the building boom, with public spaces and efficient public transit, said Keesmaat.
“If the city isn’t livable, people move away,” she said.