Long term prospects glowing indeed
Sound Investment
National Post
While the near-term future of the Toronto luxury condo market may be clouded by market meltdowns and slow economic growth, its midterm and longer term prospects are glowing indeed, say the experts who track, develop and market million dollar plus suites.
The current challenges will pass as has similar economic turmoil in the past. and even through troubled times the very top end of the market is likely to prove surprisingly resilient.
Jane renwick, executive vice-president of Urbanation inc., which tracks the Toronto condo market as far back as 1981, points out that despite boom and bust cycles in the economy, average monthly sales for top level luxury condos have always fluctuated in a narrow range – between 2.6 and 2.9 suites sold a month.
Also, on the plus side, simple demographics suggest demand will continue strong. demand among baby boomers looking to downsize to condos in anticipation of retirement is just starting. Population growth in the GTA is expected to continue at about 100,000 a year through immigration alone.
Foreign investors will continue to see Toronto as a safe, attractive place to tuck away money – and what better investment than a luxury condo they and their families can enjoy on business, educational or pleasure trips to North America?
George Carras, president of Realnet Inc., another development industry research company, points out that today’s stock of suites in buildings where the average selling prices is more than $653 a square foot amounts to 1,327 units or about 7% of the overall market.
“Just ask yourself if there are 1,327 people in the GTA able to write a cheque for $2 million,” he says. “To my mind the answer is yes and i think that number will grow, not shrink, because of all the other factors.”
If there are impediments to future luxury condos, the largest will be simply finding suitable development sites. There are so few of those sites. To create a true luxury condo you need a location very close to or part of one of the city’s top neighbourhoods like Forest Hill, Rosedale, Lawrence Park or certain sections of the waterfront.
But local residents’ associations are known for their resistance to such develop-ments. and to create new sites, developers must often acquire existing properties, tear them down and start again.
That suggests that future luxury projects will tend towards boutique-style projects – small intimate structures, which slip neatly into neighbourhoods, she continues.
The situation likely works against new large projects where condo towers are linked to five-star hotel chains, says Mimi Ng, vice-president of sales at Menkes Ddevelopment Ltd., creator of the Four Seasons Private Residences at Bay and Yorkville.
While the Four Seasons has proved wildly successful with both towers now 75% sold, she can see two major hurdles to leap for any developer interested in taking on another such project.
“The first is simply finding a suitable site,” she says. “and even if you do, there is the challenge of finding an internationally known, five-star hotel chain to partner with. “We now have Four seasons, Trump, the Ritz-Carlton and the Shangri-La chains, plus a host of smaller high-end operators represented in the city.
“The recognition and brand is what helps create the buzz for these projects and Toronto is now well represented by the best-known majors.”
One form of luxury housing that may again become available – admittedly in limited numbers – is elegant, stylish townhomes. not in great numbers, however, and mainly in large-scale projects, which contain a mix of mid-market and luxury suites.
Concord Adex developments, creator of Concord Cityplace at Front and Spadina and the new Concord Park Place at Sheppard Avenue east west of Leslie Street, plans to add townhomes for the upscale market and Pier 27 is looking at plans to do the same on the central waterfront east of Yonge Street.
“We are now looking at two blocks of 30 townhomes at Concord Park Place that will start in the $1 million plus range plus townhomes at Cityplace towards the Front Street end,” says Alan Vihant, vice-president of development.
“As well, in about two years we will start on luxury condo suites towards the Sheppard Avenue section of Park Place. Some will be in high-rise and some in boutique style buildings.”
Concord Adex will follow the lead set by others such as Daniels Corp. and Shane Baghai, he says.”
“The luxury product will be closest to the subway, where city planners have mandated the lower rise structures. We are fairly confident that by the time we get to them the worst of the slowdown will be over and the next period of economic expansion will be ready to start again.”
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