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 fuelled 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.
Mr. 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.
Mr. 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,'" Mr. Daimee recalled. "The owners were in Beijing but the power of attorney was local. They wanted to flip it right away."
Canada does not keep figures about foreign buyers in its real estate sector. While anecdotes about foreign buyers abound, developers argue there is no swell of unsafe investment from abroad, in part because there is enough demand domestically and in part because developers want the safest buyers possible.
"If we have a foreign purchaser, it is difficult for us to mitigate our risk against a loss. So if they decide for whatever reason not to close the transaction, all I have is a deposit. I can't deal with it beyond that," said Jim Ritchie, vice-president of sales and marketing for condo developer Tridel.
Mr. Ritchie said 95 per cent of Tridel's last 2,100 unit sales went to local buyers, although he notes foreign buyers can use a local relative.
With no hard data to distinguish between a Canadian with an ethnic name and a foreign investor with no ties to the country, anecdotal evidence mostly informs the debate over what is driving the development boom.
"I honestly believe that is quite a myth – I don't think there is a lot of foreign investment happening," said John Andrew, director of Queen's University Real Estate Roundtable.
"I think there is a certain amount of investment happening by people the sales people may mistake for foreigners, because they are landed immigrants or they may not be Caucasian."
Even if foreign investment could be quantified, experts disagree on the impact it may have.
A report released by the Office of the Superintendent of Financial Services, the Canadian bank regulator, pointed to the prevalence of cash deals by foreigners, a trend that mitigates the risk to developers and lenders.
"There is basically a two-tier market with high-end purchasers often paying cash for high-end units while others are often able to put sizable down payments for lower-priced units," the report said. It noted that many developers have marketing teams dedicated to foreign buyers.
Mr. Andrew, the real estate professor, said the cash purchases are a big plus for the market and the economy.
"When we first started hearing reports of significant foreign investors, I took that actually as good news, because they are less likely to have leveraged that purchase than Canadians are," he said.
"That's actually great for the industry, because as long as they are paying cash, they will not be dumping their product on the market (when interest rates rise)."
Even if cash-heavy foreign investment does not threaten Canadian banks because little leverage is involved, it may drive up demand and inflate prices. Or it may pop a bubble if circumstances abroad cause money to dry up.
Still, with few other options for investors from China – who are limited as to what they can buy at home and in countries like Australia – OSFI said even a price correction "would not lead to a substantial foreign withdrawal from (the) market."
From all appearances, the allure of condos in multicultural Toronto – where half the population was born outside of Canada – may come down to price. With an average price of $368,000, Toronto offers a reasonably low entry point to a market that still offers more long-term return than stocks or bonds.
"If you price right, the project will sell," said Mr. Ma. "The demand is still there and we have lots of investors."