Why the Toronto Real Estate Market is Still Worth Watching

04 July 2018
Joshua Chisvin

Toronto’s real gross domestic product was expected to grow 2.7% in 2017 and 2.5% in 2018, according to the CBoC. Despite this slight dip in the economic growth rate, there are few signs of problems on the horizon for the region, and the real estate sector will continue to benefit from this robust economic performance. People, particularly millennial singles and couples, still crave the live-work-play lifestyle in the core; companies, eager to be close to talent, are keen to move into new office spaces nearby to fill the new tech and research jobs they’re creating.

Demand will stay high for the best assets, as institutional capital and other investors continue to seek stable long-term plays. But these same investors will be careful about their decisions, because they’re not about to pay too much for new property — not when they could potentially find better yields at better prices elsewhere. Access to capital certainly isn’t an issue, but finding a good place to use that capital is.

Prospective homeowners may disagree, but industry players don’t feel Toronto is too expensive—certainly not in comparison to current world-class markets, including Vancouver. Most foresee continued immigration and investment, foreign and domestic, contributing to upward pressure on prices overall. And while there may be temporary price dips, no one should expect a major pullback on prices — barring an unexpected event that upsets the global economy or a major change in government policy.

Urban intensification will continue, especially in Toronto, where most interviewees noted the GTA will see significant densification efforts this year and beyond. With land supplies tight, companies that want to grow are looking for great locations with not-so-great real estate on them. The biggest thing is to get governments to focus on increasing supply. The city needs to coordinate on density and make more supply available to address growth and affordability.

With intensification happening all around Toronto, several waterfront brownfield projects are generating buzz and freeing up land previously closed off to redevelopment. One is the long-term redevelopment of the Port Lands, an 800-hectare parcel of waterfront property east of the downtown core. Further west, developers in Port Credit recently revealed a draft plan for a mixed-use redevelopment of an expanse of vacant waterfront land.

Yes, years from now, we may look back at this as a golden era for Toronto — the moment that sparked the city’s ascendance to the world-class short list.”

SOURCE: PwC Canada

  Real Estate