Corporations are buying them up in bulk.
Toronto and Hamilton have thousands of unsold condominium units, and prices have fallen 18-23 per cent in the Hamilton area and 25 to 30 per cent in Toronto. Still, there’s not much demand. However, big corporations are starting to buy them up in large numbers because they can afford to wait to reap the profit when prices increase, which they expect will occur in a few years. In the meantime, they will rent them. The Jesta Group, a Montreal-based firm with properties around the world, has just bought $30 million worth of Toronto condos and aims to buy about 1,000 for a half billion dollars. A Globe and Mail story said nearly 50 private funds or rich individuals are buying up unsold condos in bunches of 40 to 50 at a time.
Toronto-based private investment firm High Art Capital has launched a $1.3 billion fund and is using it to buy up to 2,200 completed but unsold condos in Toronto, Halton, Peel, Durham or York to turn them into long-term rental units. With $300 million of that total coming as a loan from the Ontario government, High Art will make 550 of the units available at the lower of either 25 per cent below local market rent; or 30 per cent of median gross household income across the GTA, whichever is lower, with affordability to be permanent through legal agreements registered on title. That range is aimed at people who can’t afford market housing but don’t qualify for social housing. A non-profit organization will help select tenants. High Art plans to hold the units for about five years, then sell them to investors and replay the provincial loan. The federal and provincial governments will waive the HST pm the purchase of these condos to turn them into rental units, reducing prices by 13 per cent. The Canadian Centre for Policy Alternatives has criticized the project as a bailout for condo developers and urged instead that public investments be used to acquire relatively affordable rental properties and keep them owned by public, social or co-op housing providers to keep them permanently affordable.