No glut here: Eager buyers snapping up downtown units as fast as projects can be launched
In downtown Toronto, the thousands of eager buyers who can easily imagine the benefits of the new condos they won’t physically see for several years continue to drive ferocious demand that outstrips the supply of presale units – defying predictions of a glut of new condos.
“The packed presentation centres and centrally located projects that sell out in a week or less really tell the story,” says Neil Uttamsingh, broker, RE/MAX Aboutowne Realty Corp., Oakville, Ontario. “The market has appreciated consistently for two decades and after seeing others reap the benefits, today’s consumers want a seat at that table.”
In early November, immigration minister Ahmed Hussen announced that nearly one million new immigrants will settle in Canada between 2018 and 2020 and it’s likely many will settle in the GTA. As importantly, Canadian employers added 396,800 full-time positions from October of last year – the biggest gain since March 2000. In addition, the federal government’s Global Skills Strategy, which cuts the time highly skilled foreign tech workers must wait for work permits to within two weeks from months, has attracted more than 2,000 applicants since June 2017.
“Immigration and jobs are fuelling demand in the GTA, as are the millennials, whether it’s the “bank of Mom and Dad” ensuring they have a place to live while pursuing their secondary education, singles buying their first homes, or young couples starting families,” says Richard Bell. Bell is founder of real estate specialist law firm Bell Alliance and the president, CEO and founder of Yongle Technologies, the leading real estate presales software company, with offices in Toronto and Vancouver. “Boomers are also playing a part in the pre-construction market, because as their downsizing plans ramp up, they want to live in a walking world where they’re close to every amenity.”
Presale Cost Advantage
Condo and real estate experts note the cost advantage of presale condos is a primary draw as the units typically appreciate 5% to 20% upon completion. The taller the building, the higher the floor and the more central the location – for example, the Financial District, Harbourfront, the Distillery District and the Esplanade – the greater the cost-to-value benefit will be. Currently, the one-bedroom-plus-den unit is particularly appealing as studios are perceived as too small while the two-bedroom units are considered too costly.
“Buy off the plans and by the time construction is complete, you’ve made money and as a bonus, you and your family or your tenants will benefit from the downtown lifestyle, convenience and amenities,” advises Uttamsingh, who sees parents with teens buying three to five years ahead of their children heading to university.
Do Your Due Diligence
Both Bell and Uttamsingh note that pre-construction condo investment is perfectly safe, provided buyers do their due diligence. They advise buyers research the developers and commit only to those that have a reputation for quality construction and timely completions. As well, always use a real estate lawyer who specializes in pre-construction and knows how to protect the consumer signing a contract with a developer whose legal teams are committed to giving their clients every advantage.
“Pre-construction condos are appealing because you get a great place to live or rent and will make money, unless you’re forced to sell in a down market – and even then, today’s down markets aren’t as deep and are fewer and farther apart than ever before,” says Bell.