Foreign investment cuts both ways in Toronto condo market
By Andrea Hopkins and Cameron French
TORONTO (Reuters) - Talking about Toronto's condo craze has become something of a sport for residents of Canada's largest city, where soaring real estate prices and a forest of construction cranes have fed speculation of a real estate bubble.
But the big question is how much of the market is fueled by cash-rich foreign investors, and whether they, seeking to capitalize on more than a decade of rising prices, are preventing the market from a soft landing.
"Lots of people think that offshore buyers are just coming in to buy, buy, buy. That's completely wrong, because they're more cautious than local buyers," says Tony Ma, president of HomeLife Landmark Realty Inc Brokerage in suburban Toronto.
Ma's 500 real estate agents, most of them Mandarin speakers, sold more than 1,280 unbuilt condominiums in Toronto last year to ethnic Chinese buyers hungry for Canadian real estate.
Canada, along with Australia, is a popular destination for global real estate investors seeking a safe and stable place to park their money, given the two countries' stable economies and financial systems that were mostly untouched by global turmoil.
"There is definitely a foreign investment component to the new condo industry -- it makes up the vast majority of sales right now," said Al Daimee, a real estate agent with Royal LePage who specializes in downtown Toronto condo sales.
Daimee spots foreign buyers and sellers by the presence of a power of attorney on condo documents - a sure sign, he said, that foreign buyers are using a local contact to close a deal. In fact, he's done such deals himself.
"The power of attorney approached me directly, saying 'I have someone to buy in this particular building,'" Daimee recalled. "The owners were in Beijing but the power of attorney was local. They wanted to flip it right away." Continued...