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Penthouse International: how rich foreign buyers are fuelling the condo explosion

The rumours are true: wealthy buyers from Russia, China and the Middle East all want a piece of Toronto. A story about smuggled cash, speculating flippers and empty towers

Penthouse International

The Ghulmiyyah family is the definition of jet set. Originally from Lebanon, Hala and Majed had their first son in the United States before settling in the United Arab Emirates, where they oversee the Ghulmiyyah construction business. There, they had two more sons. The family’s base is a four-bedroom house in their company compound in Abu Dhabi. They also own a ski chalet and a beach house in Lebanon.

A few years ago, Hala and Majed began thinking about finding somewhere more stable than the Middle East to eventually retire. Friends and extended family extolled Canada’s benefits: Majed’s sister and uncle had lived briefly in Toronto, while good friends settled permanently in Montreal. The Ghulmiyyahs researched the country’s big cities online and decided that Toronto had the best economic prospects. They applied for permanent residency in Canada and, to get to know the city better, rented a two-bedroom pied-à-terre at Bay and Charles.

In 2010, their youngest sons, Khalil and Omar, moved into that unit to attend Toronto universities: Khalil, now 26, just completed a master’s certificate in project management at York’s Schulich business school, while Omar, now 22, is taking continuing education classes at Ryerson. Meanwhile, the family was granted permanent Canadian residency, and they began looking for a bigger home that could fit them all. Brandon Ware, a 34-year-old agent with Signature Realtors, took them on a tour of downtown condos with a maximum price of $800,000. In the fall of 2011, they bought a three-bedroom unit in a complex on St. Patrick Street, near the AGO. “We preferred Yorkville,” says Khalil, “but the new area has a lot of fun stuff close by. We’ve got the Entertainment District and Yonge and Dundas right there.”

Demand for condos from foreign buyers like the Ghulmiyyahs is helping fuel the downtown boom. Many international investors are attracted to high-end brand names: as many as 40 per cent of the units at the new Four Seasons condo-hotel were bought by foreigners, including the $28-million penthouse, which set a record price for Canadian residential real estate. Units at the Shangri-La—the ninth condo-hotel built by the Hong Kong–based developer outside of China—started at $800,000 pre-construction, and the marketing campaign focused on finding Chinese buyers.

The wealthy international elite all want a piece of Toronto, even if just for a little while. They’re buying a pied-à-terre for business trips, or as a home base to help secure immigrant status. Or they’re sending their children here on student visas, usually to attend private school or the University of Toronto. The 42-storey RCMI condo on University Avenue near the American Embassy has been bought largely by South Koreans for their U of T–bound kids.

The reasons these investors pick Toronto are multiple: low interest rates make it easy to buy; Canadian foreign owner­ship regulations are simple to navigate; and Toronto is home to a robust industry of consultants and brokers who cater to foreigners, often in their own language. But the biggest reason they pick Toronto is our famously stable real estate market. When so much of the world is experiencing political and economic upheaval, a condo unit high in the Toronto sky is seen as the closest thing to a safe haven.

 

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