Tag Archives: real estate sector
Rapid population growth and a stable economy are fueling a construction boom in this Canadian metropolis.
By Alex Bozikovic – Architectural Record
In most North American cities, active construction cranes are a rare sight these days. But in downtown Toronto, they’re ubiquitous, lifting up steel beams and glass panels for new towers in Canada’s largest metropolis, where the population—currently at 2.5 million—is gaining 80,000 to 100,000 people per year.
While the U.S. construction market remains in the doldrums, Toronto’s real-estate sector has been humming along since the late 1990s, with only a brief slowdown in 2008. Today, the research service Emporis is tracking 147 high-rise buildings, among other projects, under construction in Toronto; the majority are residential and office buildings in the urban core, although towers are also popping up in the suburbs. In terms of design, most of these buildings won’t turn heads. But some developers are tapping top talent in hopes of creating architectural standouts.
“We’re very excited about what’s coming,” says Alfredo Romano, head of Castlepoint Realty, one of the developers of 3C Lakeshore, a 2.4 million-square-foot district that Foster + Partners is master-planning for a former docklands. Romano says the 13-acre, mixed-use site will feature “signature towers” by Foster, along with buildings by the local firms Kuwabara Payne McKenna Blumberg and architectsAlliance.
The project is part of a larger initiative, dubbed Waterfront Toronto, to reimagine roughly 2,000 acres on Lake Ontario. West 8 has designed a series of promenades, while Michael van Valkenburgh has proposed an 18-acre park to anchor a new neighborhood. Buildings by Moshe Safdie, Pelli Clarke Pelli, and Saucier + Perrotte are now in the works. Ultimately, the Waterfront Toronto project will accommodate 40,000 residents.
Why are developers in Toronto so bullish? Romano cites the city’s consistent population growth, for starters. “Then, on a macro level, the economy is stable and secure,” he adds. “We have a strong banking sector, and our development model is a lot more conservative than in other places.” Local banks typically require new buildings to be 70% sold before construction begins, and mortgage lending is tighter here than in the United States. For projects with rental housing, many of the landlords are recent immigrants, from China or South Asia, who see real estate as a solid, long-term investment.
The city’s development boom isn’t free of criticism. Suburban sprawl, highway gridlock, and a transit system pushed to capacity are among the gripes. “We have a city that isn’t proactively planned, and hasn’t been for years now,” says Meg Graham, principal of the firm Superkül Architect and a professor at the University of Toronto’s architecture school.
Given the sharp market downturns in other major cities, there also are fears in Toronto of a real-estate bubble and bust, and most experts agree that a market correction is inevitable. Still, the downtown area appears relatively stable. Through the 1970s, Toronto resisted urban-renewal projects, and its prewar neighborhoods remained vital. (Jane Jacobs, who lived in the Annex neighborhood from 1968 until her death in 2006, was a major figure here.)
Good public schools, ample social services, recreational facilities, and a diverse population—over 50 percent of Torontonians are now foreign-born—make the city attractive to young people. Indeed, many of the new towers are catering to single professionals and young families who want urban lifestyles and are willing to live in small spaces. A 500-square-foot condo in the downtown area costs at least $300,000.
Moreover, the downtown is attracting a fair share of wealthy residents. For a site along a busy road in the exclusive Yorkville district, the local firm Hariri Pontarini Architects is designing a six-story luxury condominium with limestone and glass cladding. Its 10 units (starting at 1,800 square feet) are priced from $2 million to $5 million; half have sold. “People have developed an appetite for apartment living. I think the city is anticipating a dramatic shift toward a more sophisticated, European environment,” says architect Siamak Hariri, who was born in Germany and studied at Yale.
Locally, everyone is talking about Toronto gaining world-class status; certainly, it is rivaling Montreal for the title of Canada’s cultural capital. For Hariri, Toronto offers a higher quality of life than any global metropolis. “Look at our restaurants, our live music, our galleries. People are dressing well,” he says. “It’s not a great jump to make this a better city.”
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Garry Marr and Paul Vieira, Financial Post
The federal government is once again looking at tightening rules in the Canadian mortgage market, according to a source close to the situation.
Finance officials are set to meet in Ottawa on Monday with some of the country’s leading economists for pre-budget discussions and the subject of whether to tighten housing regulations may come up.
Much of the discussion about changing the mortgage rules seems to stem from comments made by the Bank of Canada governor who last week warned that consumer borrowing could not continue at its present clip.
“Canadian household balance sheets are becoming increasingly stretched,” said Mark Carney, who issued a warning to legislators about taking steps to contain the growth of personal debt. “Historically low policy rates, even if appropriate to achieve the inflation target, create their own risks.”
A spokesman for the Finance Minister said toughening existing rules on mortgage eligibility is not on the agenda on Monday when Jim Flaherty meets with economists. The spokesman added the government has already addressed the real estate sector in initiatives introduced earlier this year.
But Craig Alexander, chief economist with TD Bank Financial Group, said while he hasn’t heard specific talk about changes to mortgage rules he could see it happening if the market heated up again.
“There is growing concern about the growth of debt. It’s now 146% of personal disposable income and the bulk of that is secured debt — mortgage debt or home equity lines of credit,” said Mr. Alexander, adding the worry is that if long-term rates remain low or go even lower it could once again ignite the housing market.
He said the easiest way for the government to tighten rules would be to tweak the income test requirement. Instead of consumers qualifying for government-back mortgages based on the rate on their contracts — the case for terms five years or longer — they would be tested on the posted rate, which is considerably higher and requires more income.
In April, the government adjusted mortgage rules to force consumers to qualify based on posted rates but left in a loophole that allowed the discounted rate for terms longer than five years. It also increased the minimum down payment for investment properties to 20% from 5%.
Those moves came after the government imposed requirements in 2007 that forced consumers to have a minimum of 5% down on a home and lowered amortization periods to a maximum of 35 years from 40 years.
Mr. Alexander said if the government went further and imposed rules that further lower amortizations, or worse, increased the minimum down payment, it could seriously impact the housing market.
A real estate source indicated that as recently as eight weeks ago he had heard Ottawa was considering tightening mortgage rules but the recent slide in the market has it rethinking that. The latest statistics show average prices are now falling, while sales are down about 20% from a year ago.
Michael Polzler, executive vice-president of Re/Max Ontario-Atlantic Canada, said housing activity is slowing, but all indications are the market will be okay and prices relatively stable under the present rules.
“I would be surprised [if there were further changes] because I think you want to keep the housing market rolling,” said Mr. Polzler.
The government has to balance the impact any changes in mortgage rules might have on the overall economy. According to July GDP data, the home resale market fell significantly for a third consecutive month, and led to an 8% decrease in the output of real estate agents and brokers. The output of real estate sector is now at about two-thirds of the level recorded at the beginning of 2010 when housing was hot, Statistics Canada data indicates.