Toronto is Topping the List for Investors as Real Estate Demand Continues to Grow

According to a study conducted by Urbanation, CIBC, and Teranet, nearly half of all new units in 2017 were sold to investors and then rented out, while 1 in 10 new Toronto condos are owned by non-residents. Therefore, it is fair to say that Toronto is topping the list for investors.

As more people move to Ontario’s largest city for work, school, or simply more opportunities for themselves and their families, the demand for real estate will only increase.

Toronto is the Best City to Invest in today

Here are 4 reasons why Toronto is the best city in the world to invest in today.

Immigration

Toronto has over 200 different nationalities among its 3 million residents. Canada announced in November 2017 that it plans to admit nearly one million immigrants over the next three years.

The number of refugees, family reunifications, and economic migrants will increase to 330,000 in 2019 and 340,000 in 2020, respectively. Toronto has received 30% of the immigrant population, while Montreal has received 17% of the immigrant population. Based on these figures, not only is immigration booming here, but the market will rely heavily on investors to supply rental units in the coming years.

In addition to having some of the highest immigration rates (per capita), Toronto’s fast-growing technology center was ranked fourth out of 50 tech talent markets in a 2018 CBRE study. Toronto was also ranked seventh out of 140 cities in the 2018 Economist’s Livability survey. Skilled workers are coming here and staying because not only is Toronto an opportunity-rich city, but employers are paying top dollar to hire the best minds from around the world.

Students

Toronto is a growing city with world-class amenities from the nation’s top universities and state-of-the-art research centres. With over 200,000+ students in Toronto, high home prices, and a tough stress test, much of the student population here rent from locations within walking distance of their educational facilities. Due to these factors, student housing is gaining more and more attention among investors, and for good reason, Real Insights reported.

If we look at the institutional investing playbook, we can see that The Canada Pension Plan Investment Bond, for example, has been investing in off-campus housing operations in both the United Kingdom and the United States since 2015.

In campus housing, Toronto is 10 to 15 years behind other countries, especially when 35,000 beds are required to accommodate our growing student population. Student housing is proving to be a profitable and recession-proof niche for Toronto investors.

Millennial Workers

The millennial generation appears to live by the mantra “location, location, location.” Adults born between 1980 and 2000 prefer to live, work, and play in Toronto, where they are less likely to require a car to get from one place to another. Despite several reports expressing dissatisfaction with the city’s high rents, the average working millennial is making ends meet to stay in the heart of the GTA.

According to a new LowestRates.ca report, 2019 rental costs have increased by more than $400 since last year, with the average one-bedroom unit costing $2000 per month. The city’s job market is the most appealing to millennials who remain in the city. In 2017, there were 1,518,560 jobs in Toronto, with 544,480 jobs in the downtown core and potential of 915,000 jobs over the next 20 years.

Low Vacancies & Rising Rental Rates

Toronto has one of the tightest rental markets in the world at 1.1 percent. According to the Canada Housing and Mortgage Corporation (CMHC), a slowing tenant turnover rate, combined with a growing population, will put additional strain on the market and drive up prices.

Tech-related growth from companies like Instacart, Uber, and Pinterest will continue to put pressure on Toronto’s rental housing market as Canadian and international tech workers scramble to live near their workplaces.

The cumulative rising rental rate over the last 12 months has been 7.6 percent, 17% over the last two years, and 26% over the last three years. We anticipate a continuing trend of low vacancies and high rental rates, as pre-construction condo projects are not being completed quickly enough to accommodate the growing population. Pre-construction condos and short-term rentals are two investment strategies that investors in Toronto are successfully implementing.