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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.

  • LCBO sucks

    Can someone tell me if these foreigners are buying homes with similar post-tax money? Seem to me that Canadians are getting priced out of their own market, becuase they have to buy a home with whatever money they have left after the government takes their cut with some of the highest tax rates in the world. Not fair in my opinion.

  • Lazy Boy

    A ski chalet in Lebanon?

  • Suzy

    Lazy Boy …what’s your point ? YOu dont know they have snow in Lebanon ? Get outside..yeah and its awesome with some great Shirah red wine after a nice long ski day.
    Life is not fair at all LCBO. It happens in everyday life. If someone has the dollars by whatever means, then more power to them. It happens all over the world…let them buy and ensure canadians remain working on construction sites, it helps our economy.

  • milo

    while i’m sad that sometimes i get priced out of our market – these people are dumping MILLIONS of dollars into our economy and this continues with on going property tax payments.

    It only helps our city – and the high prices keep the trash out.

  • Genius

    interesting how this article basically promotes money laundering

    similar argument can be made to criminals who burn down properties, and then employ a community to build a more modern edifice and sell to whomever will pay top $

    do the ends really justify the means?

  • Lane

    What upsets me the most are the price breaks and incentives offered to offshore clients. There ought not to be any preferential treatment. Domestic clients ought to have the same opportunities…the same incentives…the same availability of units.,.

  • david

    good story. It’s been driving the condo biz for the last 10 years

  • T.R.

    Lane, domestic buyers DO have the same incentives. It’s just those who are first approached about new developments are the wealthy ones. I see it happen everyday, my in laws are developers.

  • Realtor

    Condo Explosion? I think the writer needs some updating. The condo market is excessively quiet right now. As a Realtor I can tell you condo listings downtown are getting hardly any showings…the market has stalled…it is not dying…but it stopped “exploding” a while ago.

  • dankbasementapartment

    I have a friend who worked for a prop. management company five years ago. They put her up in a nice 1+den in cityplace.

    She had no neighbours on her floor, or the floors above and below her. It seems that Chinese investors prefer to keep the units vacant. Banking on profit from appreciation only, they could care less about rental income.

  • http://www.poweredbysearch.com/ Alex Rascanu

    Very interesting article. Thanks for this in depth look at some of the global dynamics at play within Toronto’s real estate market.

  • http://missdelite.tumblr.com/ missdelite

    milo: By “dumping millions into the economy”, are
    you referring to Prada, Gucci and BMW? Because besides RE, that’s where big
    money goes. As for taxes, that $$ isn’t being allocated to fix the crumbling
    Gardiner or flooded subway stations – it’s lining slush funds for politicians’
    future campaigns.

    Unless, you’re referring to the employment of temporary
    foreign workers in the service and labour industries who can now afford a
    crappy 1B in a shitty part of town for themselves and 10 of their brethren.
    Yeah, that sub-minimum wage, no-benefits “salary” is being sent back
    home to the Philipines or wherever their kids are located.

    It’s a thriving middle class (the “trash” as you
    refer to it) with a vested interest in local business, infrastructure, school
    systems and politics that contribute to a vibrant city – not these phantom owners
    treating Toronto like their personal safety deposit box, who can afford to
    dump-and-run to Singapore or the next Cyprus depending on how much the global
    economy’s tides turn in their favour.

    But hey, as long as middle class Toronto teens can “aspire”
    to compete for valet parking jobs at the Four Seasons, it’s all good.

 

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