In 2008, it looked the like beginning of the end for luxury real estate in Canada. Vancouver’s Ritz-Carlton stalled in 2008 and remains a giant hole in the ground. In Toronto, the excitement about One Bloor East – potentially the tallest residential building in Canada – turned into frustration and eventual disappointment as the developers’ ability to finance the building fell through.
Image: defkreationz / Flickr
But now, a rebound seems to be in effect. New high-end projects are selling quickly. Vancouver’s Cosmo Condos sold over 200 of its units in less than three days, and the launch of X2 Condos in Toronto saw a frenzy of interest from brokers and buyers. Some of the stalled projects have also come back to life: the One Bloor East site was sold to Great Gulf Group, and is now being redeveloped as Number One Bloor.
Some observers note that the reason that this has occurred is because the tightening inventory in some of the biggest markets (like Vancouver and Toronto) has reduced the stock of cheaper units, and people are being forced to move up.
At the same time, some of the owners of high-end real estate were strongly hit by the economic downturn, and they are looking to offload properties to increase their stock of liquid assets. Since they are selling out of necessity rather than to secure a profit, some of these high-end sellers are selling for less than they would like to. When your second home costs more than $3 million, and it is not selling, you might have an urge to jump at a price you would previously have disdained. This is fuelling further interest in this market.
If you are thinking of entering the luxury market, remember that it is always difficult to make predictions about how a property will fare in the long run, and with high-end real estate the gamble is even bigger.
But the fundamentals of good real estate still apply: location remains the most important factor. Other ingredients that will help ensure your property retains and continues to appreciate value is the quality of its construction and the property’s architectural and design beauty.
Nelson Goulart
Broker of Record with Signature Service GMAC Real Estate
www.ssgmac.ca
