It’s been nothing but good news for Toronto’s frothy real estate market. After a decade of steadily rising property prices, 2011 was a near-record year for city residential transactions. Propelled by Canada’s booming, commodities-based economy, home sales jumped by more than 4 per cent while average house prices, now at C$465,412, increased by 8 per cent compared with 2010, according to the Toronto Real Estate Board.
Those numbers contrast sharply with the market in the US, where the Commerce Department reported new home sales fell by an additional 2.2 per cent in December, making 2011 the worst year in recorded American history.
Into Toronto’s buoyant urban arena comes a decidedly high-cost, and high-profile, new subsector: luxury condominium projects attached to five-star hotels. Long a staple of big urban areas worldwide, Toronto’s nascent hotel-residence boom is playing catch-up as international five-star brands such as Four Seasons, Ritz-Carlton, Trump and Shangri-La open their doors in the city’s skyscraper-filled Downtown and in luxury boutique-lined Yorkville.
“Toronto real estate has always lagged other leading global markets like Paris or New York,” says Peter Freed, a Toronto property developer working mostly in the loft-filled King Street West corridor. “This has left a serious void in the local marketplace.”
He ought to know. In 2007, his company, Freed Development, helped kick-start the city’s hotel-residential movement with the launch of 550 Wellington West, in partnership with a Thompson Hotel next door. Its 336 units, ranging from roughly 450 sq ft to 2,400 sq ft, are almost sold out. Prices have appreciated steadily, he says, from C$350 per sq ft at launch to about C$650 today.
Freed has moved on to Thompson Residences, a 310-unit development directly across from (and serviced by) its namesake hotel. But while 550 Wellington West almost had the hotel-condo market to itself, Thompson Residences, which opens in 2014, joins an increasingly crowded (and costly) group.
In the heart of Downtown, close to Toronto’s famous CN Tower and Air Canada Centre, the 159-unit Ritz-Carlton Residences opened last year on the upper 20 floors of a 53-storey Kohn Pedersen Fox-designed tower. The apartments are between 1,500 sq ft and 6,000 sq ft and cost from C$1.6m to C$9m. The Ritz-Carlton’s prices are consistent with nearby rivals, the newly-opened 118-unit Trump Toronto Residences and the 287-unit Shangri-La Residences, opening late this year.
Topping all three will be the costliest property development in Toronto’s (if not, Canada’s) history, the 200-unit Four Seasons Private Residences, which debuts late this year in a pair of new-build towers in the heart of Yorkville. Nearly sold out, Four Seasons units range from 1,265 sq ft to 9,000 sq ft, are priced from C$1.9m and include a 9,300 sq ft penthouse that has already been purchased for C$28m.
“The demand for large residences from 3,000 sq ft to 5,000 sq ft has been a real surprise,” says Janice Fox, Four Seasons director of sales. “They all sold out within the first year. We could easily sell another hundred more.”
Fox’s optimism may sound outsized. But the 4,000 sq ft to 6,000 sq ft residences on top of the nearby Hazelton Hotel helped establish Yorkville’s viability when they sold out at more than C$1,000 per sq ft a full year before the project’s 2007 opening date. Both properties, like the Trump, Ritz-Carlton and Shangri-La, have attracted large numbers of Asian and Middle Eastern buyers, while Americans and South Americans have been conspicuous in their absence. Strong interest by Canadians, and especially Torontonians, has been an additional surprise.
Luring buyers to these projects are the types of amenities and services typical of similarly-styled developments worldwide. There are restaurants with international celebrity chefs: New York’s David Chang and Daniel Boulud at, respectively, the Shangri-La and Four Seasons. Other services include private lobbies, 24-hour concierges, on-site meeting rooms and fleets of chauffeured cars.
“I’m five minutes from my office but also five minutes from shops and entertainment,” says John Hutson, a Toronto-based partner at Deloitte Canada, who purchased both a one- and two-bedroom condominium at the Trump, which, like the Shangri-La and the Ritz-Carlton, is set in the middle of Toronto’s financial district.
Yet with most office buildings and leisure amenities closed on weekends, the Downtown district’s main allure might also be its main shortcoming. Toronto-based buyers may want to live where they work but part-time residents may find Downtown’s desolation far less favourable. “The area feels vibrant during the day but turn out the lights and all you see are cabs and glass towers,” says David Fleming, an agent at Bosley Real Estate and author of torontorealtyblog.com.
And then there’s the projects’ pricing, which, considering the sheer number of units currently hitting the market, Fleming feels is unsustainably high. “We’re looking at upwards of C$2,000 per sq ft for some units,” he says. “I’m very curious to see what happens with the remaining units because personally I have no idea who’s going to buy this stuff.”
David Kaufman was a guest of the Ritz-Carlton
● New-build, top-quality design
● Five-star, on-site amenities
● Many projects close to Canada’s financial headquarters
● Upwards of twice average Toronto condominium prices
● Downtown projects may feel desolate on weekends
● Potential for glut in the market; ongoing predictions of market “correction”
What you can buy for …
C$1m 891 sq ft/one-bedroom unit at the Shangri-La Residences (C$973,600)