Toronto Breaks New Real Estate Record

Toronto Real Estate, CN Tower & Air Canada Center

Toronto Real Estate, CN Tower & Air Canada CenterToronto Real Estate Properties Smash Record

TORONTO, CANADA –  Toronto real estate prices shattered new sales records as real estate investors spent a record breaking $4.9 Billion dollars in commercial investment property in Toronto this quarter.  Toronto real estate investors invested in high rise towers, industrial complexes and shopping malls. The previous record of $3.9 billion which was set in the last quarter of 2006  was surpassed this quarter by over $1-billion setting a new record for Toronto real estate.

Growth in both sales volume and individual prices grew by over 70% higher than 2012 and 75% than the first part of 2013.

Real estate investors bought into all segments of property types as  both commercial real estate and industrial real estate  hit record levels of investments as high as $1.4 billion.  Retailers were not left behind as the commercial real estate property sales hit another record level of investment at $1.2-billion in sales of retail and shopping malls.

Some of the bigger deals that drove the new records were done by large institutional investment and pension funds which included GE Capital Real Estate, Slate Properties Inc., H&R Real Estate Investment Trust, King Sett Capital, Primaris Retail Real Estate Investment Trust which included a variety of Canadian shopping centers including the Dufferin Shopping Mall a famous Toronto-area property jewel.

Toronto Skyline
Toronto Real Estate Skyline

Foreign investment funds have been flowing into Toronto commercial real estate for the past decade as International investors, pension funds and industry specialists hunt for secure investments that provide a safe rate of return.

Toronto Investors Fear Higher Interest Rates

The record prices across all sectors have been driven by both market demand and historically low interest rates. However the Government of Canada bond rates have been rising the past month and real estate mortgage brokers fear that the return on yield-driven markets like real estate will turn negative if the interest rates continue to increase.

To look at similar comparisons the Canadian bond rates have traditionally followed United States bond rates which began rising last month after a significant increase in employment data which surprised the financial markets.  U.S. Federal Reserve chairman Ben Bernanke suggested that the powerful American central bank might start cutting back its investment program which included monthly purchases of over $85-billion of bonds and securities in order to keep mortgage yields artificially low.

Toronto real estate investors stated that a rise in higher rates will pose significant problems for both small family home investors to large Canadian real estate investment trusts (REITs), which have both benefited from the lowest interest rate environment in over 40 years.

Any increase in interest rates will certainly have a downward effect on both residential and commercial properties as the increase will cause a rise in their monthly mortgage payments.  Toronto has experienced a huge rise in both residential and commercial real estate but there is a growing fear that the Toronto real estate market may be losing confidence in the face of rising interest rates over supply and decreasing demand from foreign investors.

Vancouver Real Estate $1M Average

Vancouver also set new records as 54% of single-family detached properties in the City of Vancouver were assessed at over $1-million or greater on July 1, 2012 which is a huge jump from 2009 when 66% of single family detached homes had assessments of under $1 million.

Over the past few year the flow of international real estate investment money has been shifting from Vancouver to Toronto as foreign investors and pension funds are seeking long term safety as one of the prime motivations for international investment. Both Toronto and Vancouver real estate investors anxiously anticipate the effect of the interest rates on the 3rd quarter which has been seen as weaker in historic terms.

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