Saturday, April 20, 2013
Canada’s housing market drawing the big-money crowd
Sotheby’s International Realty is seeing a surge in demand from wealthy Syrians, Egyptians and Europeans looking for a safe and relatively stable place to park their millions — Canada’s softening real estate market.
There has been an uptick in “very significant transactions” in tony areas like Oakville and North Toronto by Europeans, many with young families who originally had planned to settle in the U.S. but fell in love with Canada instead, says Sotheby’s Canada CEO Ross McCredie.
At the same time, Montreal’s exclusive Westmount area has become top of the real estate wish list for high-net worth Syrians and Egyptians looking for a safe haven for their money and families, he added.
Increasingly, many of these deals — especially those over $10 million — aren’t even showing up in MLS sales tallies because of buyers seeking the privacy afforded by private or exclusive deals, or finalized under the cloak of a corporate purchase, McCredie noted.
“The lack of inventory is a big problem in the high-end market,” so agents are having to find their own properties rather than look to the MLS system, said Andy Taylor of Sotheby’s Toronto office, which has done more international business in the last 18 months than in the last six years.
“What we are seeing is very wealthy high-net worth individuals who see the Canadian real estate market as undervalued in their world, in terms of what else they are looking at and what else they own,” added McCredie.
“They see this as a stable country. They love our currency. And they see cities that have changed dramatically in the last 20 years and are much more appealing to an international buyer.”
In a bid to better understand who is buying, why and where, the high-end realty company — which just launched into the Canadian market eight years ago — undertook a survey of its top agents in over a dozen key cities and produced what it calls its first Top Tier Trends Report.
While there has been a softening in demand for homes over $2 million, especially in Vancouver and Toronto, since housing sales began their double-digit slump last summer, Canada remains firmly fixed on the radar for the growing number of millionaires and billionaires from Shanghai to Sydney, notes the report released Thursday.
Wealthy Canadians, of course, remain the dominant players in this niche market, but in Toronto, Vancouver and Montreal they’ve been facing more competition, particularly in the last five years, from would-be Chinese, Russian, British and American buyers, it says.
Sotheby’s has seen heightened interest from Europeans, largely in Toronto real estate, since the euro crisis, says McCredie, adding that about 25 per cent of its luxury sales in the Toronto area are to foreigners from the U.S., China, Russia, the Middle East and India.
Its percentage of foreign buyers is closer to 40 per cent in Vancouver and 50 per cent in Montreal, notes the report, according to Sotheby’s agents surveyed for the study.
Most are looking for iconic, spacious homes with very high-end finishes, but others are willing to pay what it takes just to get a great location — even if it means pumping millions more into the place in renovations, said McCredie.
Just six weeks ago, Sotheby’s recorded a record $4 million sale — the highest price ever paid for a semi-detached house in Toronto. The 4,000-square-foot semi is in Yorkville. The buyer was local, but 30 per cent of those looking at the well-appointed home were international buyers, said Taylor.