Skip to main content
Open this photo in gallery:

Luxury real estate experts are forecasting a market change with more demand from foreign buyers as the borders open up.ISTOCK PHOTO

International buyers of Greater Toronto Area (GTA) luxury real estate have been waiting for lockdowns to ease but they are returning to the market eventually, according to people on the front lines.

“It’s starting to come back,” says Justin Cohen, vice-president and broker with Re/Max Realtron Barry Cohen Homes Inc., which specializes in high-end real estate. “There were a ton of foreign buyers before COVID hit, from October [2019] to March 2020. Then it all stopped, but now they are starting to call, starting to come. But the issue is not much the quarantine when you come here, it’s the quarantining when they go back to China. I suspect when travel opens up, there will be a lot more.”

Most enquiries are coming from Hong Kong and mainland China, he adds.

More of the same is being reported by other luxury real estate brokers. Local luxury real estate agent Tamsin Pukonen says she expects more of an uptick with heightening political unrest in the Middle East and Hong Kong, and says she has most recently had buyers reach out from Brazil and the United States.

“Hopefully this will all encourage quicker approvals for more development,” she says. “I would also like to see more interesting architecture. If developers can a fetch higher price per square foot, they will be willing to build more interesting buildings. We have already started to see some of this. I just hope the recent increase in construction costs does not get in the way.”

Michael Kalles, president of Harvey Kalles Real Estate Ltd., agrees there’s a rebound happening. “Foreign buyer enquiries are at the same level today as they were eight months ago. We expect a market change with foreign buyer demand when the borders open up,” he says.

In the past, Chinese buyers tended to dominate the foreign market. In late 2017, a Globe and Mail article quoted government statistics revealing that 70.6 per cent of foreign buyers were from China, followed by buyers from the United States (4.6 per cent) and India (3.6 per cent).

Chinese international real estate search engine said in an article last October that Canada was the fifth most-enquired country by Chinese buyers in the first half of 2020, with Toronto being the most popular city.

It still remains to be seen how big of an impact Canada’s handling of the pandemic and foreign perceptions of our country in terms of safety will have on foreign buyers.

The overall GTA real estate market has softened since the peak March period, with a lack of inventory being the biggest factor.

According to the Toronto Regional Real Estate Board, there was a 19 per cent decrease in sales of properties over $2-million in the GTA in May compared with March (794 from 982). As vaccines roll out more, and borders open and flights resume, brokers think those luxury sales numbers will jump again, and foreign buyers will help propel that.

There is no question that non-resident buyers are purchasing expensive homes. All the popular reasons for this remain: the stability of our political system and the real estate market, cultural diversity, low interest rates, the quality of our education (parents of students studying here often buy real estate in Canada), universal health care, a growing economy and low Canadian dollar.

Cohen says that, while it’s true that the overall percentage of foreign buyers in the Canadian real estate market hovers around the mid-single digits, when talking the luxury market, that percentage is higher, despite the imposition of a 15 per cent foreign buyer tax in Ontario and British Columbia in 2017.

“The foreign buyer’s tax was implemented on the assumption it was foreign buyers who were driving up unit sales and prices in the Golden Horseshoe,” Kalles says. “The last 15 months has seen record-setting prices and unit sales driving almost exclusively from Canadian buyers.”

After a halt on immigration during the lockdown months, Canada aims to welcome 401,000 new permanent residents in 2021. With population growth via more immigration comes more foreign investment, says Jason Mercer, Toronto Regional Real Estate Board (TRREB) chief marketing analyst.

“Our forecast this year for an average price in the GTA is over $1-million,” he says. The average selling price across the GTA for the overall market according to TRREB’s May market report was $1,108,453. “So, when you get into the luxury side, it would be substantially higher than that,” he says.

Most real estate buying, both conventional and luxury, tends to be in Canada’s populous cities, such as Toronto, Vancouver and Montreal, which pushes more demand on housing in those markets.

Sotheby’s International Realty Canada has seen a marked increase in real estate enquiries from Canadians currently living abroad who are seeking a path back home. Of the approximately 2.8 million Canadians living abroad, the greatest number are in the United States, but many are also in Hong Kong, France and the United Kingdom,

Sotheby’s president and chief executive officer, Don Kottick, says he sees pent-up demand among foreign buyers that’s soon going to further push the GTA luxury real estate market.

“Sotheby’s International Realty Canada has already seen a notable increase in the volume of international inquiries on high-end homes listed in Toronto, Montreal and Vancouver. We expect this trend to increase as travel restrictions relax,” Kottick says. “While some buyers living abroad have been comfortable buying luxury properties virtually and, in some cases, sight unseen, there are many who are waiting to be able to travel here so that they can visit neighbourhoods and properties in person.

“We foresee several waves of consumers in the coming months, both Canadian and international, as lockdown measures relax.”

Sotheby’s is seeing demand not only in Toronto but in other regions of Ontario, such as Oakville, and across recreational markets such as Collingwood, Prince Edward County, Niagara-on-the-Lake and Muskoka.

“The luxury of having more indoor and outdoor space is one of the hottest commodities in and of itself and we expect this trend to continue,” Kottick says.

One of the big factors to focus on going forward, he says, is the strength of Canada’s technology sector as a boost to the luxury real estate market.

“Cities such as Toronto, Waterloo, and the Greater Toronto Area region in general, as well as Vancouver, Montreal and Ottawa, are on the world map for their technology and start-up ecosystems,” he says. “Others such as Calgary, Edmonton, Victoria and Halifax are emerging as well. These cities are attracting major and start-up technology companies, and quality Canadian and global talent, which support demand for luxury housing.”

The federal government also announced in its April budget that it plans on imposing an annual one per cent tax taking effect this January 1 on “non-resident, non-Canadian owned residential real estate” that is deemed underused.

Advertising feature produced by Globe Content Studio. The Globe’s editorial department was not involved.

Interact with The Globe