Pamela Vasiliu
Sales Representative
pvasiliu@remax.net

RE/MAX Professionals Inc.
Brokerage
Independently owned and operated.

Date: Thursday August the 17th, 2017 
416-236-1241

 

   

Developers say foreign investors still a small segment of condo market

March 17, 2015

TORONTO – Some of the country’s leading developers Tuesday shared their own statistics on the composition of today’s condominium buyers and the consensus is foreigners are a small minority of the group.

There are a lot of myths in the condominium industry - One of the myths is that the predominate buyers are foreign investors.

The subject has long been the source of speculation with the fear that foreign buyers are propping up the high-rise sector, inflating prices and could ultimately fuel a crash if they suddenly moved out of their investments.

In late 2014, Canada Mortgage and Housing Corp. produced data that showed 2.4% of Toronto high-rise units and 2.3% in Vancouver were in foreign hands, figures that many still dispute.

James Ritchie, senior vice-president of sales and marketing with Tridel Corp., which built its first condo in 1968 and currently has 5,400 high-rise suites under construction in the Greater Toronto Area, said of about 2,000 suites closed by his company last year only 2.9% of purchasers came from outside Canada.

It really depends on where you are, the further away from the core the less interest you have from outside the country. The closer to the core, the taller the building, the more interest.

Of those 2,000 suites this firm closed last year, only nine defaulted and none was foreign bought.

A lot this has to do with deposits. Anybody who lives in this country must deposit 20% on the transaction when it’s in pre-construction. That mitigates risk. The banks are adverse to it and so are we as prudent developers, adding the 35% deposit for foreign buyers is required because there is no way to mitigate our loss for people outside the country. There are a lot of legal remedies that accrue to the developer if you are inside the country.

Deposits are regulated by the government, but 20% for domestic buyers and 35% for foreigners has become the de facto standard between builders and banks before said buyer can count as a sale. Banks demand between 60% to 70% of a high-rise be pre-sold before providing construction financing.

 

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