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In the context of a highly regarded Canadian economy, Toronto kicks up its heels
Alex Carrick, Reed Construction Data Chief Economist
It is useful to employ the rule of thumb that Ontario’s GDP and population are approximately 40% of Canada’s.
And that Toronto is 40% of Ontario.
Except in some key areas. For example, Toronto almost always accounts for more than 50% of Ontario home starts.
Toronto’s doing pretty well right now economically speaking.
I would suggest part of the reason is the strength of the financial sector.
Canada’s financial community has earned this nation the respect of the world. As has oft-times been said by the media (and Conservative politicians), we survived the recession better than any other developed nation and our “conservative” banks were a big part of the reason.
Banking strength also meant we didn’t have the losses of employment that would have caused office vacancy rates to sky-rocket.
Our Bay Street towers are still largely occupied with every prospect this will continue.
Our strong financials have also meant newly wealthy foreigners – often from the Far East or Middle East - have wanted to either relocate here or at least diversify their international real estate holdings by purchasing a condo in the Queen City.
Two advantages we have in the eyes of most offshore adults and parents are world-class educational facilities for their children and active and large expatriate communities.
The city also made the decision years ago to promote residential towers mixed in with offices, retail/shopping and entertainment in the downtown core. This has attracted many empty nesters who are trading in their bungalows in the suburbs.
Hence the astonishing boom in condo construction.
Three cities in Canada account for more than 50% of total condo construction each year – Montreal, Vancouver and Toronto. Furthermore, Toronto often has more condo starts than Vancouver and Montreal combined.
Toronto condo starts so far this year (i.e., January through June 2011) are 70% ahead of the first half of last year.
Toronto’s total housing starts in 2011, through June, on a percentage change basis are among the Top Five in Canada – along with Regina, Saskatoon, Barrie (i.e., a Toronto bedroom community) and Kingston
City Hall, under new mayor Rob Ford, is trying desperately to get its finances in order. Spending and service cuts, combined with layoffs, may cause some curtailing of construction activity.
Or maybe not. If city assets are sold to raise money, the new private sector owners may be more inclined to undertake investment spending to spruce up their newly-acquired assets.
Transit will clearly continue to be an investment-spending growth area.
There’s the Spadina Subway line extension; a possible Sheppard line; the Eglinton LRT route; and the rail connection between Union Station and Pearson Airport/Georgetown.
Some significant highway work, including 407 East and 404 North, is shifting or may be about to cross over from “hold” status to “green light.”
The upcoming results from this fall’s provincial election will play a role in establishing the environment for some large public sector projects.
The auto industry on the fringe of the city is doing a lot better than when GM and Chrysler were embroiled in bankruptcies two years ago. That has spillover benefits throughout the local economy.
Toronto is also big in high-tech and academics, two knowledge-based growth sectors that are often overlooked in a rapid-fire analysis of what is happening in the metro area.
2015 Pan Am Games facilities are other sources of work for the construction industry. Completion deadlines will approach more rapidly than may seem possible.
Immigration will remain strong but can’t be counted on to the same degree as in the past. New arrivals are increasingly looking to job opportunities in the resource-rich provinces in Western Canada.
Nevertheless, the very size and diversity of Toronto’s population is a bonus. The city is adding 100,000 people per year. That’s the equivalent of a whole new urban centre on its own.
This seems to be Canada’s time on the world stage. And Toronto, as the nation’s premier metropolis, stands to reap considerable rewards.
Contact the Jeffrey Team for more information – 416-388-1960
Laurin & Natalie Jeffrey are Toronto Realtors with Century 21 Regal Realty.
They did not write these articles, they just reproduce them here for people
who are interested in Toronto real estate. They do not work for any builders.