Penthouse International: how rich foreign buyers are fuelling the condo explosion

[crooked soul]

a lengthy read... but totally worth it...
I have stated in several of my posts before- these condo's are killing the very fabric of our city.. sure they add to the density - but they are making it hard for "REAL" Toronto residents to advance - the cost of living here has skyrocketed and that includes rentals too- and it is the result of this..

http://www.torontolife.com/daily/inf...s/#more-174324

Penthouse International: how rich foreign buyers are fuelling the condo explosion

The rumours are true: wealthy buyers from Russia, China and the Middle East all want a piece of Toronto. A story about smuggled cash, speculating flippers and empty towers

The Ghulmiyyah family is the definition of jet set. Originally from Lebanon, Hala and Majed had their first son in the United States before settling in the United Arab Emirates, where they oversee the Ghulmiyyah construction business. There, they had two more sons. The family’s base is a four-bedroom house in their company compound in Abu Dhabi. They also own a ski chalet and a beach house in Lebanon.

A few years ago, Hala and Majed began thinking about finding somewhere more stable than the Middle East to eventually retire. Friends and extended family extolled Canada’s benefits: Majed’s sister and uncle had lived briefly in Toronto, while good friends settled permanently in Montreal. The Ghulmiyyahs researched the country’s big cities online and decided that Toronto had the best economic prospects. They applied for permanent residency in Canada and, to get to know the city better, rented a two-bedroom pied-à-terre at Bay and Charles.

In 2010, their youngest sons, Khalil and Omar, moved into that unit to attend Toronto universities: Khalil, now 26, just completed a master’s certificate in project management at York’s Schulich business school, while Omar, now 22, is taking continuing education classes at Ryerson. Meanwhile, the family was granted permanent Canadian residency, and they began looking for a bigger home that could fit them all. Brandon Ware, a 34-year-old agent with Signature Realtors, took them on a tour of downtown condos with a maximum price of $800,000. In the fall of 2011, they bought a three-bedroom unit in a complex on St. Patrick Street, near the AGO. “We preferred Yorkville,” says Khalil, “but the new area has a lot of fun stuff close by. We’ve got the Entertainment District and Yonge and Dundas right there.”

Demand for condos from foreign buyers like the Ghulmiyyahs is helping fuel the downtown boom. Many international investors are attracted to high-end brand names: as many as 40 per cent of the units at the new Four Seasons condo-hotel were bought by foreigners, including the $28-million penthouse, which set a record price for Canadian residential real estate. Units at the Shangri-La—the ninth condo-hotel built by the Hong Kong–based developer outside of China—started at $800,000 pre-construction, and the marketing campaign focused on finding Chinese buyers.

The wealthy international elite all want a piece of Toronto, even if just for a little while. They’re buying a pied-à-terre for business trips, or as a home base to help secure immigrant status. Or they’re sending their children here on student visas, usually to attend private school or the University of Toronto. The 42-storey RCMI condo on University Avenue near the American Embassy has been bought largely by South Koreans for their U of T–bound kids.

The reasons these investors pick Toronto are multiple: low interest rates make it easy to buy; Canadian foreign owner*ship regulations are simple to navigate; and Toronto is home to a robust industry of consultants and brokers who cater to foreigners, often in their own language. But the biggest reason they pick Toronto is our famously stable real estate market. When so much of the world is experiencing political and economic upheaval, a condo unit high in the Toronto sky is seen as the closest thing to a safe haven.
Agents, developers and market analystshave wildly differing opinions on how much Toronto property is snapped up by non-residents. Some believe as many as 30 per cent of new condo builds are bought by foreigners. Statistics Canada doesn’t track real estate purchases by non-citizens, nor does the Bank of Canada keep tabs on how many mortgages foreign nationals are granted.

Everyone agrees, however, that foreigners have served as key investors since condos first began to rise in Toronto. The story starts back in the 1970s, when attractive pricing along the waterfront drew European interest. Then foreign money really began to flow here from Hong Kong in the decade before the U.K. gave up control. New houses in North York, north Scarborough and Richmond Hill became homes for Hong Kongers fleeing the spectre of Communist China; even those who stayed on the island stashed their savings in Toronto condo towers. Since then, waves of investment have come from newly minted millionaires in Russia, India, mainland China and the Middle East. Their money goes further in Toronto than in London, New York or Tokyo, and they’re confident their investment won’t plummet in value like so many have in Greece, Spain and Dubai.

Yorkville has become the neighbourhood most coveted by residential buyers from abroad, mostly because of its prestige. Several of Brandon Ware’s international clients have bought their condo units with cash to avoid mortgage payments. “There’s a huge demand,” Ware says. “We need more units to
become available.”

Some of the money flooding into the Toronto condo market is smuggled here from emerging markets where residents are eager to escape totali*tarian or corrupt regimes. An estimated $2.74 trillion left China by illicit means over the last decade, and roughly $501 billion left Russia during the same period. Over the past couple of years, many Iranians scrambled to invest their capital into new 905 condo towers before the Iranian government banned the movement of domestic currency out of the country this past July. And in India, the government grew so alarmed by the outward flow of currency that, beginning in 2010, it started opening income tax offices in other countries—its officials coordinate with governments in 10 countries to ensure that Indian citizens pay tax either at home or abroad.

Toronto’s developers know foreign buyers are smuggling in money but prefer not to ask too many questions—cash is cash.

The market for international buyers has grown so big that dozens of Toronto agents make it their specialty. Joanna Kao came to Canada from Taiwan in the late 1970s to study business at McGill, then followed her sister to Toronto, where they both found jobs in real estate. At first Kao mostly sold condos, but gradually she began to focus on international clients who wanted to buy commercial space. (Her handful of remaining residential clients tend to be the children of friends who are coming to Toronto
to study.)

One of Kao’s biggest clients this year is a buyer from India who made his fortune running casinos in a former Soviet republic. When the global financial crisis hit, eight out of nine of his establishments went bankrupt. Seeking a safe place to invest the rest of his money, he asked the advice of a friend, an India-based furniture wholesaler with warehouses in Toronto. The furniture dealer introduced him via email to Kao, who then spent a few months sending him floor plans, links to websites and photos of both residential and commercial properties. Last spring, he was ready to buy, and he flew to Canada. On the plane coming over, he had an Iranian seatmate, with whom he shared his plan to pay $500 a square foot for a retail store space in the new Diamond plaza at York Mills and Don Mills. The Iranian, who owns some Toronto real estate himself, advised that this was an excellent use of a half-million dollars. By the time he landed, the Indian with the casino fortune was so excited about his investment that he spent only 10 minutes talking to the developer before jumping at the opportunity.

He has since decided to move to Canada and is waiting for his application for immigrant status to be approved. He has already bought a home in Stouffville to share with his doctor wife and their children. “If they are going to invest their money in Canada, it’s because they want to be here later on,” Kao says of her clients. She and the casino magnate have their eyes on another commercial property in the west end, to buy this fall. It’s listed at $3 million, but they’re hoping it will stay vacant until early winter, at which point they’ll make a lowball offer of $2 million.

Helena Wong, a sharply dressed agent with a shrewd smile, spent the late ’80s and early ’90s travelling to Hong Kong for the developer Tridel, soliciting buyers for new GTA condo projects. In the late ’90s, she went solo, travelling to China and teaming up with Canadian consultancies—they’d push the advantages of moving to Canada, and she’d represent Toronto condos. Around that time she met and married a fellow Torontonian named Wayne Murdock, then an agent for the now defunct Family Trust. Now divorced, they continue to work together—their connections are so solid that there’s rarely any need for international travel. People come to them. Murdock and Wong say Chinese buyers like Toronto because they don’t have to rely on an agent’s knowledge to figure out property value—MLS histories and the municipal assessment rolls provide reliable evidence of real estate appreciation.

The couple deals almost exclusively in pre-construction condo sales, and some of their initial buyers then turn around and sell their units for a profit while construction is still underway. Major developers like Plazacorp, which is building condos in Liberty Village, give Wong and Murdock a week or two to sell units with an incentive (a free parking spot or storage locker, or a break on the unit price) before the project is sold to the general public. Wong and Murdock pitch clients they know will be interested. They had success in late 2010 selling Plaza*corp’s Edge and Edge 2 buildings near the Drake Hotel to Chinese buyers. At first, they had to work to persuade them that the gentrifying, off-subway location was a good investment. “They saw pictures of the area and said, ‘Ugh,’ ” says Wong. “We had to tell them about the zoning changes, the future, the upsell potential.”

Canada has lured international investors by making itself friendlier to real estate deals than many other countries. The rules and regulations here are much less onerous than they are in Mexico, for example, which won’t let outsiders buy oceanfront property. Australia, in response to growing complaints that purchases by non-citizens were driving up housing prices, introduced stringent new real estate rules for non-citizens in 2010. Now, foreigners are only allowed to buy new property (a move aimed at protecting the value of resale homes and increasing rental stock), the federal Foreign Investment Review Board must approve all purchases by foreign buyers, and temporary residents must sell as soon as their visas are up. Canada has no such limitations. In fact, we welcome foreign buyers because it promotes development—attracting foreign capital is a terrific way to kick off giant condo projects. However, it encourages developers to cater to investors rather than end-users, hence the proliferation of tiny units designed to entice landlords, not tenants.

Manuel De Sousa is a 47-year-old airline pilot who grew up in Oakville with his Portuguese parents. He has lived in Dubai for the past 12 years with his wife, Sharon, a Chinese-Jamaican from Scarborough, and their three kids. De Sousa decided his assets were far safer in Toronto after he lost money in various far-flung locales. One of his foreign purchases was a beachfront vacation home in the United Arab Emirates, which is now worth half of what he paid for it—in 2010, real estate in the country lost at least 50 per cent of its value. In 2005, he lost most of his investment in a vacation resort in Margaret River wine country, near Perth, Australia. “I’m going to have to work for five extra years to pay for that,” says De Sousa. The project got bogged down in municipal council objections. “In the end, there was nothing left, the banks owned everything,” he says. “If I had put that money into condos in Toronto, I could easily afford four of them.”

That would be in addition to the three he owns now: one near College Park that he’s renting out, and two in the process of being built, at Yonge and Eglinton and at Bloor and Lansdowne. De Sousa buys pre-construction to maximize his eventual profit, and looks for units that have two bedrooms and a den, which he believes are more appealing to the professionals he prefers to rent to. He manages his apartments through Linda Chu, an agent at Sotheby’s International, who finds him tenants like a Chinese-national executive spending two years in the city, and a doctor from the U.A.E. completing an internship at a University Avenue hospital. “That’s just a snapshot of the international interest in Toronto,” says
De Sousa.
Although he holds Canadian citizenship, the Canadian Mortgage and Housing Corporation classifies De Sousa as a foreign buyer: the corporation cares only about residency, not citizenship. Anyone who spends less than 183 days a year in the country is categorized as “non-resident” and is ineligible for mortgage insurance. On the flip side, people who live in the country for at least half the year are deemed residents, even if they’re here as students or on other temporary visas—for real estate purposes, anyone with a driver’s licence and a credit card is Canadian.

De Sousa’s bank required a 35 per cent down payment to grant him a mortgage (some banks ask non-residents for as much as 40 per cent) and a deposit-secured credit card. Non-resident landlords are required to remit a quarter of their gross rental profits to the Canada Revenue Agency, and many also pay local property managers or superintendents to look after their tenants’ needs. None of this seems to act as a disincentive. De Sousa says that his aim isn’t rental income, but banking his principal and growing equity. “If there was a 15 per cent correction over a five-year term, I’d just keep renting them out,” he says. “I can sit back and wait.”

Asset protection, rather than growth, is also a central goal of the investors who work with the Toronto immigration advisors Helen and Vladimir Riabinin. “They’re actually even ready for some loss,” Vladimir says of his clients and their global real estate portfolios. Thirty thousand Russians have immigrated to Canada since Vladimir Putin came to power. The Riabinins’ clients find them through word of mouth, through their website, RussianToronto.com, and through their Russian-language YouTube videos highlighting various GTA neighbourhoods. Rental income is not a big draw—often, the Riabinins’ clients prefer to keep their condo units empty until they or their children get permission to live here, rather than deal with the hassles of having tenants. All they want is for the bulk of their principal to remain safe.

Five years ago, Helen earned her real estate licence so she could help her newcomer clients find homes. “I try to tell them to come for 10 days, or 14 days,” she says of their shopping trips. “But some just don’t have the time.” This past August, she spent four whirlwind days familiarizing a female client from Uzbekistan with the city: they toured close to 20 houses, lost a bidding war, opened a Canadian bank account, registered the client’s two sons (who have student visas) at a private school and bought a house in Richmond Hill. Before she left, the client signed over power of attorney so that Helen could handle any legal paperwork that comes up before she returns.

The ultimate goal of the Riabinins’ clients is, most often, to someday immigrate to Toronto. Until recently, the swiftest method was to apply for residency as an immigrant investor. To qualify, the candidate must have a net worth of at least $1.6 million and be willing to let Citizenship and Immigration Canada hold $800,000 of their money for five years and two months (after which it’s returned—without interest but with thanks for “creating jobs and helping the economy grow”). However, this past July, CIC froze the program in order to deal with a 25,000-application backlog. Immigration Minister Jason Kenney has mused about raising the immigrant investor buy-in from $800,000 to $1.6 million, saying that Canada isn’t charging enough for the privilege of becoming a permanent resident. The CIC says the freeze is only temporary, though it will inevitably discourage the Riabinins’ clients from investing here. The end of the deluge of foreign investors could mean the end of Toronto’s condo boom.

[doady]

Originally Posted by crooked soul

a lengthy read... but totally worth it...
I have stated in several of my posts before- these condo's are killing the very fabric of our city.. sure they add to the density - but they are making it hard for "REAL" Toronto residents to advance - the cost of living here has skyrocketed and that includes rentals too- and it is the result of this.

Just ban all immigration. Problem solved.

[hkskyline]

Well, with interest rates being so low, they want a piece of asset to counter inflation since it's better than putting it in the bank. I doubt immigration through real estate investment is fuelling all this. They probably don't care about the rental income anyway, but the capital gain instead, so they can keep the place empty. When they sell it, their non-resident status may also mean no capital gains taxes are due.

Money laundering is a problem with this, but Canadian banks have a responsibility to do their due diligence when they accept the money. Even if the foreign buyer pays everything in cash, the money still needs to go into a bank account to settle.

[MysticMcGoo]

Originally Posted by doady

Just ban all immigration. Problem solved.

Wouldn't solve a thing.
You don't have to be a Canadian citizen to own property in Canada. Many of these speculators probably have only set foot in the country once or twice, and have no intention on actually living in these condos.
They just go where the bubble is biggest. Look no further than Vancouver and Toronto. Leveraging myself against the housing market is my strategy at the moment. A lot of money can be made when a bubble bursts.

[yin_yang]

wait...are y'all shitting me? this is such a good thing. it'll spur politicians into action. more bike lanes! more subways! more density! it is looking good.

[Mollywood]

It's sad to hear of condos, just sitting empty or used only for a few months a year. I wonder how many downtown condos sit empty or underused. The large amount of foreign buyers might explain why there are so many ugly, dull, grey boxes going up. Let's face it, investors don't give a damn about city building, they just want profits. (just like many of those greedy developers)

I blame the city for not putting more restrictions on urban planning, materials and architectural design. (including colour) Places like Liberty Village could have been major attractions and a destination district, if a small amount of effort was demanded from developers. Liberty Village should have been designed as a whole community, not piece by piece. Even the new buildings going up right now, give nothing back to the community and ignore the industrial aesthetic, that already defines the area. The newer buildings are pretty much a disaster. We had an amazing opportunity, with this condo boom and in many cases, we blew it. (and we are still blowing it now) That's what happens when you have no urban planning department and you allow developers/foreign investors to design your city.

[Dev.z]

There's honestly nothing wrong with this. Much has been made about the involvement of foreign investors in spurring the condo boom in Toronto. Many people now believe that this is some sort of nail in the coffin for real estate prices in the city and proof that the market is filled with nothing more than hot air.

The truth is, if Toronto wants to be the world class city we keep pretending we are our markets, including our real estate market, needs to be open to global competition and global capital. The majority of these investors don't sound like people who got sucked into some get rich quick scheme - they have legitimate needs for the properties and their return requirements are more a preservation of capital than market outperforming rates.

I think it's true that this condo boom is a little long in the tooth but some people are actually shocked to think that investors are present in real estate markets. Always have been, always will be - and if the current vacancy rate for res units in the core is any indication - that's not such a bad thing.

Does having foreign capital competing in your market make it harder for "true Torontonians" to afford the assets that they might have had their eyes on growing up. Sure it does. But its better than the alternative of a market that's totally unattractive to foreign buyers.

Toronto sees itself as a big city but in many ways complains about all that big cities go through. Traffic, congestion, construction, rising living costs, the squeezing out of residents that feel entitled to a certain standard of living. Toronto has these problems because its starting to become the world class city most of us hoped it would, but somehow there are people that thought that this transition wouldn't cost anything; that we could just snap our fingers and be world class without having to go through all the headaches and hoops that it takes to get there.

It seems that the last "big city" transition that Toronto will complete is a realization by most of its residents that changes currently underway in our city are the normal progression for urban areas; at least the ones lucky enough to get this far. So if you want that house in High Park, you're going to have to compete with the doctor from the UAE. If you want great transportation, you're going to have to pay for it. If you want that high paying legal or banking job, you're going to have to beat out some very smart international candidates. It appears that our time to truly step out onto the global stage has come, so whether or not you wanted all the perks that come with that, we're all going to have to share in the costs because there's no going back now.

So instead of everyone complaining about the problems or just simply ignoring them, we could all really benefit from a real upfront discussion on what dynamics our city is going through and how best to manage the change. I guess these issues just don't have the same far reaching effects or the magnitude of Rob Ford's football coaching fiascos or the city hall dustups. If anything's going to sink us, it's not foreign investors. Its our complacency and partisanship, its our entitlement and outdated expectations, its our collective inability to be honest about the issues and changes that we face as a city. I mean, we elected Rob Ford, I don't need any more proof to say we're our own worst enemies.

[crooked soul]

so essentially what you are saying is that we the "true" residents of Toronto have to suffer and pay the price at the expense of catering towards foreign investors to make our city more appealing and hold up to the label of being called a world class city.. to me that is ludicrous -
a world class city does not rely on outside influence- but is in a league of their own through establishing their own identity/culture- and where their own residents can thrive and grow personally and professionally and be proud to call their city their own..
majority of "true" residents of our lovely city- are broke- and can't keep up because of the high costs of living.. and freakin' condos being built everywhere that are making it hard to advance- because of the so called high demand of condos.. when in fact- it is all just an illusion and we are ALL paying the price!

[oceanmdx]

There is nothing wrong with having condos sit empty... so long as all the bills (condo fees, property taxes etc.) are getting paid, it's fine with me. The construction and real estate industries create lots of jobs.... and development earns a lot of money for the city.

I love it when people in my development don't show up much... they pay the same fees that I do, but they don't consume any resources.... I do that for them.

[oceanmdx]

Originally Posted by crooked soul

so essentially what you are saying is that we the "true" residents of Toronto have to suffer and pay the price at the expense of catering towards foreign investors to make our city more appealing and hold up to the label of being called a world class city.. to me that is ludicrous -
a world class city does not rely on outside influence- but is in a league of their own through establishing their own identity/culture- and where their own residents can thrive and grow personally and professionally and be proud to call their city their own..
majority of "true" residents of our lovely city- are broke- and can't keep up because of the high costs of living.. and freakin' condos being built everywhere that are making it hard to advance- because of the so called high demand of condos.. when in fact- it is all just an illusion and we are ALL paying the price!

Yup... that's about it in a nut shell... although you are not really "catering" for foreign investors, you just have to be open to them in one form or another... perhaps Canada could adopt laws similar to Australia's regarding foreign ownership of real estate and still achieve that?

[Mollywood]

Originally Posted by oceanmdx

There is nothing wrong with having condos sit empty... so long as all the bills (condo fees, property taxes etc.) are getting paid, it's fine with me. The construction and real estate industries create lots of jobs.... and development earns a lot of money for the city.

I love it when people in my development don't show up much... they pay the same fees that I do, but they don't consume any resources.... I do that for them.

Well, there is something wrong if you want dense, lively, interesting areas. Density and bustling sidewalks make a city interesting. I want to see all areas of the core, full of people, day and night. Empty apartments don't accomplish that.

[Toronto2008]

Originally Posted by crooked soul

so essentially what you are saying is that we the "true" residents of Toronto have to suffer and pay the price at the expense of catering towards foreign investors to make our city more appealing and hold up to the label of being called a world class city.. to me that is ludicrous -
a world class city does not rely on outside influence- but is in a league of their own through establishing their own identity/culture- and where their own residents can thrive and grow personally and professionally and be proud to call their city their own..
majority of "true" residents of our lovely city- are broke- and can't keep up because of the high costs of living.. and freakin' condos being built everywhere that are making it hard to advance- because of the so called high demand of condos.. when in fact- it is all just an illusion and we are ALL paying the price!

Whoa..... put down the flag Patriot Pete. The majority of toronto is broke? Source???? And, Uh, Not everybody that lives here has trouble advancing -- my property values are going up thankyouverymuch

FYI: foreign investment is a good thing.

[rbt]

Originally Posted by Mollywood

Well, there is something wrong if you want dense, lively, interesting areas. Density and bustling sidewalks make a city interesting. I want to see all areas of the core, full of people, day and night. Empty apartments don't accomplish that.

Empty apartments aren't really that empty. They're fully furnished and used several months of the year by people who actively take part in the city while visiting. You don't fly half-way around the world and spend $400k on an apartment to sit inside and watch television.


The condo boom has created a noticeably larger amount of people on the streets downtown, in Yorkville, North York, and even around Square One.

Retail in these areas is thriving; not struggling to find customers.

'Empty condos' seem to the working with regard to city building. Something tells me they're not really all that empty.

They're not 'snowbird neighbourhood in the summer' empty at least.

[JustinB]

Originally Posted by rbt

The condo boom has created a noticeably larger amount of people on the streets downtown, in Yorkville, North York, and even around Square One.

Definitely not around Square One. The street scene around here is still pretty desolate most of the day. MCC is fairly dense by suburban standards, but everyone still drives. If you want to see vibrant street here, Port Credit is where you want to be. There is simply too much parking spaces, and roads to make MCC walkable, IMO.

[JustinB]

My concern about condos is the loss of retail diversity at street level. I usually make an effort to explore new condo developments, and I see a convenience store, a bank, and maybe a medical office and that's it. I live near the 530 St. Clair development, and we used to have a bakery, a number of produce stores, and some ethnic stores. Now in the same palce, there is a starbucks, and a TD bank.

[rbt]

Originally Posted by JustinB

Definitely not around Square One. The street scene around here is still pretty desolate most of the day.

Compared to 10 years ago, the area around Square One is an absolute zoo of pedestrians.

Not saying it's great; just improved.

My concern about condos is the loss of retail diversity at street level.

Agreed. I rather like what New York did regarding banks; they're not allowed at ground level.

[Dev.z]

Originally Posted by crooked soul

so essentially what you are saying is that we the "true" residents of Toronto have to suffer and pay the price at the expense of catering towards foreign investors to make our city more appealing and hold up to the label of being called a world class city.. to me that is ludicrous -
a world class city does not rely on outside influence- but is in a league of their own through establishing their own identity/culture- and where their own residents can thrive and grow personally and professionally and be proud to call their city their own..
majority of "true" residents of our lovely city- are broke- and can't keep up because of the high costs of living.. and freakin' condos being built everywhere that are making it hard to advance- because of the so called high demand of condos.. when in fact- it is all just an illusion and we are ALL paying the price!

It's not an illusion, if the demand is there, it's there - it doesn't matter what form that demand takes. Why should one set of participants limit their potential and opportunities just so they can wait for others to catch up. My point was not so much that we need this to become a world class city, it's that Toronto is playing on the world stage now and like it or not, everyone is going to have to change their expectations on what they can or cannot afford. So if you own property already and don't plan on moving out of Toronto any time soon, then it simply has a net affect on your affordability. If you don't own property and are concerned about being able to afford property you can either do what you can to increase your income, wait for property values to stabilize and consolidate or buy property where it's more affordable. Bottom line is that the city isn't waiting for everyone to say "OK, I'm ready, you can grow now". To me, the positives of foreign investment in our city far outweigh the negatives so the argument that we need to slow down and create regulation to make all the "true" residents happy is nuts. It's the same as advocating for any special interest group where one small party complains loud enough eventually getting what they want and leaving everyone else in a lurch.

[ACT7]

Originally Posted by Dev.z

There's honestly nothing wrong with this. Much has been made about the involvement of foreign investors in spurring the condo boom in Toronto. Many people now believe that this is some sort of nail in the coffin for real estate prices in the city and proof that the market is filled with nothing more than hot air.

The truth is, if Toronto wants to be the world class city we keep pretending we are our markets, including our real estate market, needs to be open to global competition and global capital. The majority of these investors don't sound like people who got sucked into some get rich quick scheme - they have legitimate needs for the properties and their return requirements are more a preservation of capital than market outperforming rates.

I think it's true that this condo boom is a little long in the tooth but some people are actually shocked to think that investors are present in real estate markets. Always have been, always will be - and if the current vacancy rate for res units in the core is any indication - that's not such a bad thing.

Does having foreign capital competing in your market make it harder for "true Torontonians" to afford the assets that they might have had their eyes on growing up. Sure it does. But its better than the alternative of a market that's totally unattractive to foreign buyers.

Toronto sees itself as a big city but in many ways complains about all that big cities go through. Traffic, congestion, construction, rising living costs, the squeezing out of residents that feel entitled to a certain standard of living. Toronto has these problems because its starting to become the world class city most of us hoped it would, but somehow there are people that thought that this transition wouldn't cost anything; that we could just snap our fingers and be world class without having to go through all the headaches and hoops that it takes to get there.

It seems that the last "big city" transition that Toronto will complete is a realization by most of its residents that changes currently underway in our city are the normal progression for urban areas; at least the ones lucky enough to get this far. So if you want that house in High Park, you're going to have to compete with the doctor from the UAE. If you want great transportation, you're going to have to pay for it. If you want that high paying legal or banking job, you're going to have to beat out some very smart international candidates. It appears that our time to truly step out onto the global stage has come, so whether or not you wanted all the perks that come with that, we're all going to have to share in the costs because there's no going back now.

So instead of everyone complaining about the problems or just simply ignoring them, we could all really benefit from a real upfront discussion on what dynamics our city is going through and how best to manage the change. I guess these issues just don't have the same far reaching effects or the magnitude of Rob Ford's football coaching fiascos or the city hall dustups. If anything's going to sink us, it's not foreign investors. Its our complacency and partisanship, its our entitlement and outdated expectations, its our collective inability to be honest about the issues and changes that we face as a city. I mean, we elected Rob Ford, I don't need any more proof to say we're our own worst enemies.

I think you've stated your point very well, and I agree with you. It's really funny the contradiction that some Torontonians believe - when we hear about other cities attracting foreign investors, we get jealous, yet when it's happening in Toronto almost more than anywhere else, we get annoyed. I don't get it. And incidentally, the VAST majority of the market is not fueled by international buyers and foreign speculators, etc, etc. There is nothing but anecdotal evidence which is taken as gospel in the media.

I have that copy of Toronto Life at home and have read it with excitement. There is definitely a component of foreign buyers, no question, but the rules around foreigners buying property are much more strict than for locals. In most cases, these people have the cash or most of the cash needed to buy a property so they are in fact not causing any kind of disastrous bubble. The reality is that no matter how many foreign buyers there are, the market is still largely local, as it is in most cities. It's the local market that keeps things healthy, and always will. I can't remember where I read it, but it was just a few days ago regarding the new Four Seasons. Most of the buyers were local - the one that made headlines was the $28 million penthouse. Guess what, newspapers need to sell a story. And there's nothing sexy about a headline that says "Local Torontonians Buying Homes in Toronto."

[Taller, Better]

There is a whiff of xenophobia in assuming offshore owners are somehow "bad". Anyone who has been to London, New York or Paris knows a lot of the buildings are not owned by local residents.

[Toronto2008]

What is the point of this thread, really?

For example: The Chrysler building in New Jack City is one of the best in the world, but its owned by rich Arabs....does that somehow make the building any less awesome?!?!

Besides, these are foreign investors who pay taxes but use exactly 0 services...