Move over Toronto, Calgary’s condo market about to take off in 2012
Garry Marr
Financial Post Mar 2, 2012
A new report suggests Toronto’s condominium market may have finally peaked in 2011 but Calgary’s may be just catching fire.
The report from real estate research firm Altus Group notes new condominium sales climbed more than 100% in 2011 from a year earlier in the oilpatch.
“New condominium apartment sales in Calgary had plummeted with the recent economic crisis and stayed low in 2010. However, the market turned in 2011,” says Altus, in its report. Sales of new condominiums climbed from 1,100 in 2010 t0 2,500 in 2011.
Altus says the number of unsold units was steady from the end of 2010 as new projects saw strong initial sales. The group says improved economic conditions and lower rental vacancies are attracting investors back into the market.
“The weakness in the Calgary market from 2008-2010 was at least in part due to the exit of investors,” says Altus.
Meanwhile, Toronto has to deal with a large potential supply of new condominiums in the pipeline. RealNet Canada says more than 79,000 condominium apartments were under construction or in pre-construction in the greater Toronto area at the end of 2011.
“Planned occupancies extend as far as 2016,” Altus says, noting it takes about five years for all units released for sale in any given year to be completed.
Even if half of those condos under construction become rentals, that would add 40,000 units to the supply of condo apartments, meaning demand for rental would have to increase by 8,000 units per year to maintain current vacancy levels.
“While this was achieved last year it is more than double the average annual growth,” says Altus, adding government plans are encouraging condos as a percentage of new home sales.
The issue in Toronto remains whether rental levels can be maintained for investor-owned apartments, although a portion of investors are said to be off-shore buyers with less concern about their returns in the short-term and medium term.
“Looking ahead our expectation is that GTA new condominium apartment sales peaked in 2011, and more moderate sales levels will emerge over the next few years,” says Altus. “In Calgary, there is a potential for further improvement in sales during this cycle.”
