Condo builders push to meet a luxury shortage
Shane Dingman
The Globe and Mail
There are more millionaires than ever in Canada and while affordability isn’t an issue when the well-heeled shop in the luxury-condominium market, they may face a constraint that also plagues middle-income and lower-income house hunters: There’s simply not enough supply.
According to the 2018 Re/Max Spotlight on Luxury, only 37 condos worth more that $3-million have transacted in Toronto in both 2017 and ’18, and in Vancouver the number actually fell 13 per cent from 68 to 59 in 2018. In most other cities, the number condos selling in that range is in the low single digits.
Faced with reports that suggest that Canada’s hottest property markets will be drawing or minting even more ultrahigh-net-worth individuals, a handful of ultraluxury condo projects are under way or in development to deliver the kind of exclusive living that folks in that income bracket have gotten used to.
“We wanted to create a building that literally had all penthouses,” said Barry Fenton, president and chief executive of Lanterra Developments, speaking of the planned luxury development at 50 Scollard St. in Toronto’s tony Yorkville neighbourhood. The building proposes 64 high-end apartments in a 41-storey building. Lanterra, which has begun the presale process, said it is finding takers for units that range from about $4-million to $13-million. At $2,500 a square foot (the average in Toronto for preconstruction condos is $745 a square foot), Mr. Fenton said 50 Scollard’s market is the ultrahigh-net-worth individual worth $30-million or more. To those folks, he said, it’s a bargain, compared with global luxury towers such as One Hyde in London, which he said averages $11,000 a square foot. The issue with most buildings, he said, is that there are only a few floors of penthouses for luxury living atop a much less exclusive community.
“I live at 1 Bedford [a Lanterra development that’s also the downtown residence of Toronto Mayor John Tory]. I have about 4,500 square feet, but when you come up through the elevators there are people that have 600 square feet, 800 square feet. I’m happy with it but – the bottom line is people of that net worth want to have a certain … standard, want certain privacy, want to be with a certain group of people,” he said. “We’re not looking for 500 or 1,000 buyers; we’re looking for relatively well-off people that want to be in a community with other well-off people. And that’s what we’ve accomplished with 50 Scollard.”
Millionaire status isn’t what it used to be. In Canada’s top housing markets, being a net-worth millionaire is almost a commonplace. So, for those shopping for a “luxury” condo, $1-million just won’t cut it. But the ultrahigh-net-worth (UHNW) cohort is growing. Re/Max says 621 condos priced between $1-million and $2-million sold in 2018, up 2 per cent from 2017. In Vancouver, that number hit 811, up 6 per cent from 2017.
According to market research firm Urbanation Inc., there are five condo projects in Toronto, totalling 563 units currently in development, that sold for more than $1,500 a square foot – or double the average square foot price of a condo in the city. In the past quarter, there have only been 18 sales in seven buildings of resale condos where the price per square foot topped $1,500.
Developer Camrost Felcorp Inc. built one of the existing “superluxury” condo towers in Toronto on Urbanation’s list, 155 St. Clair W., and is nearing the completion of construction on their most recent project for these buyers: Yorkville Private Estates at Cumberland Street and Avenue Road.
Joseph Feldman, the 26-year-old director of development at Camrost Felcorp (son of David Feldman, Camrost’s CEO and president), said the uptake at their luxury developments suggest this is a market that’s been underserved.
“Over the past 20-30 years, it seems as though the focus [is] as much small product as possible because it’s the easiest, quickest to sell and there’s a shortage of it, so people have done well building that product,” he said.
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