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Toronto condo owners outpacing TSX investors

Condo city

Given Toronto’s renown for condominium development, here’s an interesting finding from BMO Nesbitt Burns: Investors would have done better with condos than TSX-listed stocks over the past 15 years.

“Since the start of the millennium, Toronto condo prices have marched steadily higher (outside of a brief dip during the recession), averaging yearly gains of 4.6 per cent and besting the more volatile TSX,” said BMO senior economist Sal Guatieri.

Mr. Guatieri’s findings, illustrated above, don’t include total returns on either investments, but he believes condo investors would still have come out ahead given relatively higher capitalization rates in the former compared to dividend returns for the latter.

“Condo investors have outperformed shareholders for the past 15 years while experiencing less volatility,” Mr. Guatieri said.

“Perhaps few sleepless nights. But on the other hand, shareholders don’t get called in the middle of the night to fix a broken water heater.”

Annual resale price gains in the Toronto condo market, by the way, were measured at 6.8 per cent in the second quarter, hitting an average $453 per square foot, according to Urbanation, which tracks the sector. Price increases for new units were a much more tame 2 per cent, while gains on the rental side were 4.6 per cent, for an average $2.48.

Notably, the number of leases surged 22 per cent from the same period last year, while sales climbed 21 per cent.

There were more than 17,700 units unsold at various phases of development.

Four in 10 Americans ...

Source: Giphy.com

… want to keep out this innocent Canadian kitty.

BlackBerry confirms Android

BlackBerry Ltd. is poised to launch a “flagship” device powered by the Android system, the smartphone maker said today as it unveiled quarterly results that fell shy of what analysts had projected.

BlackBerry rebounded to a second-quarter profit of $51-million (U.S.) or 10 cents a share, basic, compared to a loss a year earlier of $207-million or 39 cents.

When certain items are stripped out, its loss came in at 13 cents, a few pennies more than the analyst projections compiled by Bloomberg.

Revenue tumbled to $490-million from $916-million.

“We are focused on making faster progress to achieve profitability in our handset business,” said chief executive officer John Chen.

“Today, I am confirming our plans to launch Priv, an Android device named after BlackBerry’s heritage and core mission of protecting our customers’ privacy.”

VW and Germany

Economists believe the Volkswagen emissions scandal could hit the German economy this year given the size of the auto maker and the impact on others in the industry.

“The problems of Volkswagen could well cause a trickle-down effect in Germany’s economy in Q4, as the company seeks to discover how many cars are affected by the ‘defeat device,’” said chief analyst Michael Hewson of CMC Markets.

“The German auto sector makes up a significant part of German GDP, not only from exports, but also further down the supply chain,” he added.

“Any indication that this scandal translates into a sharp drop in car sales in the coming months is likely to have significant implications for the German economy.”

Volkswagen has apologized for installing the devices to cheat emissions tests in the United States, and has set aside billions to deal with the problem.

The scandal has also hit the shares of listed auto makers, which make up 10 per cent of the stocks on the DAX.

“The ripple effect from this will reach the four corners of Germany, as it is estimated that as many as one in six work in the automotive industry or an ancillary business,” said IG senior market analyst Alastair McCaig.

Quote of the week (so far)

“The executive committee is adamant that it will take the necessary decisive steps to ensure a credible new beginning.”
Executive committee of VW’s supervisory board

Video: Making the grade may not get you the job

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