Growing Construction Rates, but a decline in Condo Sales

Declining Returns from Real Estate Investments in Toronto

Toronto is booming with real estate constructions.  According to available data, the number of sky scrapers under construction in Toronto stood at 144 in February 2013, which is matched by no other city on earth.  According to a Urbanation Inc, a Toronto research firm, there are 253,768 units of new condos, an increase of 10% as compared to the previous year.  This includes four luxury hotels opened during last two years, which houses condos. 

Notwithstanding this hectic building activity, the sales of condos are actually decreasing.  This is primarily due to the apprehension that there may be a stall in the Canadian expansion, which is presently based on debt funding.  This slowdown may continue till there is a global recovery which can increase exports. 

Economists also fear that since Toronto seems to be relying on its housing sector, any crash in Condo prices can adversely affect those who are investing in the constructions and real estate.  Many now find that their investment in condos such as Trump suite does not provide returns as anticipated.  Many such buyers of condos are currently suing their builders for millions of dollars for misrepresenting facts about returns from their investment.  In these lawsuits, the buyers of these condos claimed that the developers had projected up to 27% return for their investors.  The builders also were not clear about mortgage financing and room rates.  They complained that the developers are now declining to answer their queries.

The developers, on the other hand, affirmed that there are no merits in these allegations.   They claimed that the documents provided to the buyers tell about the risks involved in these investments.

Notwithstanding the slowdown in investment returns, there are several projects which are being constructed in Toronto.  These include three towers being constructed by famous architect Frank Gehry.  One of these towers has 85 floors and may become the tallest residential building in North America.  

Despite the heavy construction activity, it is apparent that there is a decline in the property market in Toronto.  For the economists, this is one of the indications that the Canadian economy, which is considered to be stable, is also being affected by the global trends.

Although the growth in the larges city of Canada may be going through a real estate slow down, out side of the city still fairs strong growth and investment. Land for sale in Northern Ontario continues to see the largest growth in profit year over year.