Record Attendance at The Land and Development Conference – May 2012
Overview
Clearly, the real estate development business is booming in the GTA these days. Close to 500 people attended the recentLandand Development Conference at the Metro Convention Centre to hear an array of speakers addressing topics ranging from the status of the industrial market, the facts and fallacies of the condominium market in the GTA, to the question of whether there is a future for small limit size builders in the GTA.
I moderated a session called “The Facts & Fallacies of the Condominium Market in the Toronto Commutershed: Have we got it wrong?” Almost half of the attendees at the conference signed up for this presentation which involved Jasmine Crocknell from N. Barry Lyon Consultants, Martin Blake of Daniels, Barbara Lawlor of Baker Real Estate and Gabrielle Leung of Concord Adex. A very spirited discussion was held regarding the health of the GTA condominium market, including discussions on the impact of investors on the marketplace, and the question of whether land costs and construction costs on one hand, and rising prices on the other hand were potentially making the condominium market unaffordable and setting the stage for a possible correction or worse.
The developers at the table were clearly concerned about escalating land costs, but felt that with appropriate due diligence and negotiations, sites could still be obtained in the right locations at economic levels (although fewer and fewer of these). There was a concern over the influx of foreign development money that was boosting up the prices in certain cases and it was suggested that prudent developers should stay away from these bidding situations.
The development industry’s answer to rising prices for condominiums on a per square foot basis which are in the $700 range in the downtown area alone, has been to reduce the size of units by over 130 feet in the last 2 ½ years. This has actually resulted in the average costs of a new condominium dropping somewhat.
The panel felt, however, that the demand for new housing inTorontofrom an ownership perspective or rental perspective would continue to drive the market as long as pricing did not make it totally unaffordable. Innovative designs within the units and on the exterior will continue to make our condominium market one of the most innovative, creative and competitive markets in the world. Barbara Lawlor noted that balconies and windows were key selling features in small units.
The discussion then turned to the issue of both local and foreign investors. Clearly, all the panel admitted that they are a driving force in the current condominium market. However, it was felt that the number of foreign buyers was not that significant based on what the panellists were seeing on their sales. Barbara Lawlor was emphatic in her assessment that investors viewedCanada, andTorontoin particular, as a safe haven to make their investments, and that investors will continue to be a major part in the marketplace.
The overall conclusion from the panel was that the economic and demographic factors that have been in place to date and which have fuelled the current condominium explosion in Toronto, as well as government policies which have restricted low rise developments, will continue to be there into the future. Although there may be some softening of the market as we go forward, the GTA still appears to be the place to be for new condominium projects.
