What's the deal with all these foreign condo investors?

According to the recent Condominium Owner’s Report released by Canada Mortgage and Housing Corp. (CMHC) on condominium investors in Toronto and Vancouver, 61 per cent of condominium investors (or second home purchasers) planned to hold their unit for more than five years, 86 per cent of respondents did not plan to sell their unit within one year of taking possession, 64 per cent of respondents purchased their condo with more than a 20-per-cent down payment, with almost 50 per cent of respondents taking a fixed-rate mortgage. Combined, these results give some reassurance that the condominium investor market is not filled with highly leveraged short-term buyers who are extremely sensitive to interest rate adjustments. Despite some great tidbits on investors in the Canadian housing market, much of the scrutiny of the CMHC report was that it didn’t survey foreign condo investors.

Ignoring the fact that it would be extremely difficult to survey foreign condo investors, I doubt the results would change dramatically. First off, condominium purchasers from outside Canada make up a small share of the total. Secondly, from my conversations with real estate agents, these foreign condo investors plan to hold and rent the units for just as long, if not longer, than domestic investors.

I took a look at the geographic breakdown of purchasers for one of the condominium apartment projects we (Fortress Real Developments) are involved in, and it showed that just 0.7 per cent of purchasers were from outside of Canada. Alternatively, I looked at the Google Analytics for our website and found that 93 per cent of the traffic was from within Canada, three per cent from the U.S., one per cent from Brazil and the UK, with a number of countries making up the remainder. Mind you, this is not a very representative sample, but I would conclude that the number of foreign condo investors in the Toronto condominium market is surely overestimated.

As a potential new condominium buyer, the existence of foreign condo investors is a desirable one! They view Canada as a great place to live – a place with stable banking, a stable political system, a globally thriving country and city that has tremendous growth potential (and not only for real estate). In addition, with the help of these out-of-country buyers, buildings are sold quicker and construction starts sooner, meaning you don’t have to wait as long to move into your new suite!

I think it is fantastic that foreign condo investors believe that Toronto and Vancouver are a good place to invest. Do your research and make sure the process is not foreign to you.