casaguy
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Foreign funds snap up deluxe condos
LORI MCLEOD
REAL ESTATE REPORTER
Globe and Mail
October 20, 2007
A flood of foreign investment in luxury condo developments is vaulting Toronto to the status of a world-class destination and financial centre, but also runs the risk of creating "concrete caverns" that push low-income residents well out of the downtown core.
"Silent" money is pouring in from places including Russia, Dubai and South Korea, spurring an explosion of condo developments with suites selling for a staggering $1,000 per square foot or more, said Sherry Cooper, chief economist at BMO Nesbitt Burns.
These ritzy developments will boost the city's revenue base and vault Toronto into the big leagues alongside London and New York, Ms. Cooper said. They'll also create new jobs, gentrify some neighbourhoods such as Yonge Street south of Bloor Street, and stimulate economic growth, she added.
However, with the benefits come challenges, including the erosion of affordable housing downtown and strain on public services, Ms. Cooper said.
"While net-net I believe this is a positive, there's also the clear risk of displacement of low-income residents who will no longer be able to afford anything near the downtown core," Ms. Cooper said in an interview.
High prices are spilling over from the posh Yorkville and waterfront districts into surrounding areas, where anything other than a "shoebox" is becoming out of reach for many buyers, including young families, Ms. Cooper said.
More people commuting to downtown from satellite communities will put additional strain on already-jammed public transportation, roads and highways. As developers snap up everything from parking lots to low-rises, downtown Toronto is also in danger of losing its character and views.
"We run the risk of creating concrete caverns that block the sun and increase gridlock on already-busy city streets," Ms. Cooper said.
This inflow of funds is escaping notice because it is difficult to follow and is not tracked by Statistics Canada, said Ms. Cooper, who has compiled much of her data anecdotally and through visits to the sales centres for high-end developments.
As of Aug. 31, Toronto had 13 luxury high-rise projects on the go, including the Four Seasons, Trump International Hotel & Tower, and Residences at the Ritz-Carlton, according to data from RealNet Canada Inc.
Many foreigners aren't buying solely for investment reasons, but also plan to use their condos when they visit Toronto and as a home base for travels in North America, Ms. Cooper said.
In addition to traditional condos, some high-end developments are offering hotel rooms that owners can use when they are in Toronto, then receive revenue when the units are let out to hotel guests.
Billionaire Donald Trump, who broke ground on his 57-storey project at Bay and Adelaide streets last week, said despite its world-class status, Toronto is still a real-estate bargain by international standards.
His project, which is 70-per-cent sold, has attracted buyers from the United States, Hong Kong and Europe, Mr. Trump said. More units will be released for sale this fall starting at $1.6-million.
LORI MCLEOD
REAL ESTATE REPORTER
Globe and Mail
October 20, 2007
A flood of foreign investment in luxury condo developments is vaulting Toronto to the status of a world-class destination and financial centre, but also runs the risk of creating "concrete caverns" that push low-income residents well out of the downtown core.
"Silent" money is pouring in from places including Russia, Dubai and South Korea, spurring an explosion of condo developments with suites selling for a staggering $1,000 per square foot or more, said Sherry Cooper, chief economist at BMO Nesbitt Burns.
These ritzy developments will boost the city's revenue base and vault Toronto into the big leagues alongside London and New York, Ms. Cooper said. They'll also create new jobs, gentrify some neighbourhoods such as Yonge Street south of Bloor Street, and stimulate economic growth, she added.
However, with the benefits come challenges, including the erosion of affordable housing downtown and strain on public services, Ms. Cooper said.
"While net-net I believe this is a positive, there's also the clear risk of displacement of low-income residents who will no longer be able to afford anything near the downtown core," Ms. Cooper said in an interview.
High prices are spilling over from the posh Yorkville and waterfront districts into surrounding areas, where anything other than a "shoebox" is becoming out of reach for many buyers, including young families, Ms. Cooper said.
More people commuting to downtown from satellite communities will put additional strain on already-jammed public transportation, roads and highways. As developers snap up everything from parking lots to low-rises, downtown Toronto is also in danger of losing its character and views.
"We run the risk of creating concrete caverns that block the sun and increase gridlock on already-busy city streets," Ms. Cooper said.
This inflow of funds is escaping notice because it is difficult to follow and is not tracked by Statistics Canada, said Ms. Cooper, who has compiled much of her data anecdotally and through visits to the sales centres for high-end developments.
As of Aug. 31, Toronto had 13 luxury high-rise projects on the go, including the Four Seasons, Trump International Hotel & Tower, and Residences at the Ritz-Carlton, according to data from RealNet Canada Inc.
Many foreigners aren't buying solely for investment reasons, but also plan to use their condos when they visit Toronto and as a home base for travels in North America, Ms. Cooper said.
In addition to traditional condos, some high-end developments are offering hotel rooms that owners can use when they are in Toronto, then receive revenue when the units are let out to hotel guests.
Billionaire Donald Trump, who broke ground on his 57-storey project at Bay and Adelaide streets last week, said despite its world-class status, Toronto is still a real-estate bargain by international standards.
His project, which is 70-per-cent sold, has attracted buyers from the United States, Hong Kong and Europe, Mr. Trump said. More units will be released for sale this fall starting at $1.6-million.