Cool with condo
Alex Newman
National Post Nov. 18, 2011
As Toronto condo prices march steadily upward, luxury suites are right in step. Fetching at least $1,000 per square foot with sizes anywhere from 1,800 to 4,000 sq. ft., final sale prices are well into the millions. Not surprisingly, such projects are situated in the city's toniest neighbourhoods - Forest Hill, Yorkville, Yonge and St. Clair, the financial district, plus a smattering along the waterfront.
What is surprising, however, is who is buying. In addition to the wealthy couple downsizing from their large family home, and foreign investors looking for a safe financial haven, there's a newly emerging group of younger buyers.
What's even more surprising is that a sizable number of them are first-time buyers, according to Tina Amato, vice-president at Baker Realty, which handles sales for the Ritz-Carlton. Given that suites start at $1.4-million, these younger buyers are clearly well employed. Because most are single and work long hours, they love to be able to walk to work through the PATH system, and love the hotel perks such as maid or room service, she says.
As much as they like to be pampered in exchange for the gruelling schedules, Ms. Amato says they're also realistic about spending: "If they can't manage the Ritz, they'll go the next project down, which may not be the Ritz, but is still luxury." Stephen Price, COO of Graywood Developments, which built the Ritz-Carlton, says 10 years ago "that group wouldn't have existed in a project of this nature."
A similar shift is apparent at Trump Toronto. "Early on, the bulk of our purchasers were a mix of Canadian and foreign investors," says Howard Tikka, director of marketing for Trump. As the tower nears completion, however, he is finding more local people, some empty nesters but particularly area finance workers who want to have a downtown residence. It's also attracted companies looking for guest suites for clients who come to Toronto on business.
A similar story unfolds at the Shangri-La - a 66-storey, 370-unit project described by its marketing manager Michael Braun as being at the "intersection of the cultural entertainment and business worlds." Situated at University and Adelaide, with suites ranging from $1-million to $13.3-million for a 6,700-sq.-ft. two-storey penthouse, it's attracting whiz kids who work in the financial district and are buying up some of the smaller suites.
Even empty nesters seem to be younger downtown. Mr Braun notes that a number of buyers aged 40 to 55, not yet retired but with older kids who are moving out, "want the action of downtown." Call it a condo mid-life crisis, if you will.
While the downtown buyer wants a hip location, the downsizing older couple craves a luxury spot in familiar territory: midtown or north Toronto where they've owned large family homes. They end up choosing suites in projects like The Four Seasons, Museum House and The Avenue.
"Buyers in a downsizing phase still want to stay in the community where they have always lived," says Elli Davis, a top Royal LePage agent for luxury residential resale. "They want to be able to walk to Forest Hill Village, take a quick streetcar ride to Yonge and St. Clair, be near the subway."
Those buyers are the majority of Hunter Milborne's clientele, as well. As managing partner of Sotheby's, he's sold some of the city's most expensive condos to people from "higher-end neighbourhoods, like Bayview, Forest Hill and the Kingsway. And most are independently wealthy."
The suites they buy - for anywhere from $1-million to $10-million - aren't even a "huge part of their net worth," Mr. Milborne says. One couple, who couldn't decide which apartment to buy, purchased both, figuring they'd sell whichever one they decided not to keep.
And what this market wants more than anything is space, says Mimi Ng, vice-president for Menkes, which developed the Four Seasons. "Our purchasers are primarily end users who are either downsizing from a family home, or already living in a condo and making the move to a larger suite in a new building," she explains.
The other draw is service, which could put hotel-condos in the front of the luxury pack. "A big part of buying into the [Four Seasons] is its reputation for incredible personalized service, and access to all those amenities, concierge, spa, restaurant," Ms. Ng says.
The final group of luxury buyers is international. "International buyers represent about a third of the suite sales at Shangri-La," Mr. Braun says. He figures these buyers probably have business interests in the city, and tend to travel from home to home.
Trump Toronto also has its share of the international market. Mr. Tikka says their buyers come from the U.K., the U.S. and 20 other countries. While Canadians account for about 35% of Trump purchasers, U.K. buyers represent about 25% and U.S. about 20%. The remaining 20% are scattered throughout the world.
The waterfront is a big draw for the international buyer, says Cityzen Group's president Sam Crignano. His Pier 27 project has a wide variety of suite prices, but luxury purchasers are attracted to the penthouse suites, which command about $1,000 per square foot.
Mr. Crignano has recently noticed an increasing interest "from wealthy buyers from mainland China and south Asia," he says. "They may want to live in the suite, but mostly they want to park money with the reassurance that if there's political upheaval where they're from, there's a place they can go to."
Foreign buyers have always gravitated to waterfront properties, Mr. Crignano says. "[It's a trend] that's not just here but elsewhere in the world, because there's a perception that waterfront projects demand a higher-per-square-foot price."
While location and suite size are major factors in luxury purchases, suite finishes are a close second. These include marble bathrooms, 10-or 12foot ceilings, top-of-the-line fixtures and kitchen cabinetry and appliance packages featuring Sub-Zero, Wolf or Miele. Other draws: soaker tubs and rainshower sprays and saunas and private elevators, also real hardwood floors (as opposed to engineered hardwood), granite, marble or limestone tiles, plaster cornice mouldings, and eight-inch baseboards.
Amenity spaces are also lar-ger and more luxurious. The city's usual requirement of two square metres of amenity space per unit won't do in a luxury building. For one thing, units are typically large, so there are fewer per building, which makes amenity space smaller than any mid-market building.
The pampering quotient of amenities is nice, especially when they include spas and such, but they're as much about increasing a resident's overall living space. A 1,000sq.-ft. condo in the Trump Tower, for example, expands exponentially to include housekeeping and room service, a two-level full-service spa and wellness facility, and a 10,000-sq.-ft. business facility.
Naturally, maintenance fees reflect these benefits, with high-end projects levying $1 per sq. ft. "What creates cost is staff," Mr. Milborne says. "Valet parking, concierge, spa manager that all translates into high maintenance fees."
About 8% of the condobuying public qualifies for a luxury product. What's financing this choice, at least in the downsizing set, says Ms. Davis, is the fact that they own large homes that have appreciated wildly since first purchased. Simultaneously, there's a "transfer of funds coming down the generations."
They've got the money, but they're ready to shed responsibility, Ms. Davis says. They're trading the high-maintenance large home for the freewheeling condo lifestyle. But with few options in familiar neighbourhoods - close to the shops and cafés they're attached to - developers have had to find land, even if it's on the fringes of established single-family neighbourhoods. 1717 Avenue Road - the first condo project in that whole area - for example has attracted three of Ms. Davis's empty nester clients.
Although the price tags on luxury suites can run as high as $10-million, Ms. Amato says Toronto is still "cheap" in the world market: "Our prices are lower than any other large city in the world, including Vancouver. The Ritz, at $1,100 per sq. ft. for example, is a lot lower than New York where I'd say it's at least $4,000 per sq. ft. for something super luxury."
Which is to say, luxury could be considered a bargain in this city.
1 comment:
The word "condo" has different meanings depending on the country where it is used. I have been living in Argentina and here, when they say "condo", they refer to a building of no more than 3 stories with a lovely little green park in the center, that is kind of a playground for kids and has a pool maybe. I remember I wanted to rent an apartment in buenos aires and I first told the lady I wanted a condo. She took me to the suburbs and showed me what a condo was in Argentina. We laughed about the misunderstanding, that that was some time I missed that day because of it!
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