Will the housing bubble ever burst? Are people really leaving the city in droves? Greybrook CEO Peter Politis answers all our post-pandemic real estate Qs.
Canadian Business is relaunching this fall, building on its platform as a trusted media brand and social network for the country’s fastest-growing companies and their innovative leaders, who are changing Canada for the better.
Canadian Business gives these leaders—and those who want to learn from them—the resources, networking opportunities and inspiration to innovate, connect and continue to challenge the status quo. One of the ways we are doing this is through launching the Canadian Business Leadership Circle, CB’s leader-in-residence program where each month we engage a different C-suite-level executive making an impact in their field. As part of the program, readers will have the chance to connect with these progressive-minded business execs for mentorship and professional development through exclusive content, virtual fireside chats and more.
Joining us as leader-in-residence for September is Peter Politis, CEO of Greybrook Realty Partners, a leading Toronto-based real estate private equity firm. Here, Politis speaks with writer Alex Derry about how Toronto housing trends have been impacted by the pandemic, why the city’s market is a unique investment opportunity, and what new options are emerging for first-time homebuyers in the rapidly growing Greater Golden Horseshoe (GGH) region.
What drew you to a career in real estate?
I wanted to do one of two things ever since I was young: be a real estate developer or play for the Blue Jays. I wasn’t necessarily good enough to play for the Jays, so I fell back on real estate. I’m the son of Greek immigrants and owning property is ingrained in the immigrant mentality. There are very few investments that retain their long-term value quite like real estate. While real estate has gone up and down, it rarely loses its value over time. Where other industries are often sensitive to changing trends—if you invested in tech companies 20 years ago, many of those companies don’t exist today—real estate, as a tangible asset, is more likely to retain its value or appreciate over the long term.
What trends do you see emerging in Toronto’s real estate market as we come out of the pandemic?
For a brief period, many people believed that the city’s long-established urbanization patterns were going to shift because of the pandemic, which was a short-sighted view of the situation, though understandable given a global pandemic is not something any of us had ever experienced before. What we are seeing is that people are not suddenly changing how they want to live; plus, entire infrastructure and policies have been built to increase urbanization and densification. We’re also seeing a renewed interest in “sprawling living’ “with more people that are willing to consider suburban living than ever before, which has created a surge in demand for ground-related homes in the GTA and outer parts of the Greater Golden Horseshoe, in places like Shelburne, Ont., and Colgan, Ont., where we are developing.
Will Toronto prices continue to increase? Will the bubble pop?
What’s undeniable is that we have a legitimate supply-and-demand issue in Toronto. We’ll continue to see the average prices across the GTA maintain and go up, as demand for housing within the urban core continues to rise, purchasers that can afford to buy a $1-million condo in the core are now willing to buy a home with more space in other parts of the GTA, creating demand and driving up prices even into parts of the Golden Horseshoe region. The continuous increase in the population will keep fuelling the demand for homes, and given the current supply challenges this will continue to drive up prices.
In your view, what policy tools would be most effective in cooling Canada’s housing market to make it more affordable for average Canadians?
It’s very complicated to cool the market in any kind of meaningful way across the country. You’re dealing with a complex problem because of how many people migrate to Canada, coupled with a supply-demand issue and existing land constraints. We need every level of government to come to the table with a variety of solutions. What I’ve learned in speaking with many people across Canada, from longtime investors to first-time homebuyers, is that affordability is one issue, but another is accessibility—the ability to get into the housing market in the first place. Opportunities exist for governments to enhance some of the existing programs out there. For example, new housing developments are charged HST, which is included in the sale price of a housing unit. The government could create strong incentives for first-time homebuyers by rebating a larger portion of the HST on new-construction homes to these buyers, effectively reducing the total purchase price of pre-construction homes. If similar incentives through rebates or exemptions are provided on the Land Transfer Tax for pre-construction homes, the combined impact of a consumers’ rebate in HST and LTT could materially improve the affordability of new homes. This would not only help an individual access housing that they may not otherwise been able to, but also contributes to bringing new supply to the market, generate additional tax revenue and creates jobs.
What advice do you have for people looking to invest or buy their first home?
It used to be that people wanted to live in a specific neighbourhood, and if they couldn’t live there, they would stay out of the housing market or wait until they could go to where they wanted to be. It’s more important today to get into the market somewhere, even if it’s not your preferred area, because it’s not getting any easier. Once you’re in the housing market, it becomes easier to stay in it and move to a different area, because you’re capturing appreciation.
What Greybrook projects or investments are you excited about?
We’re involved in the development of a variety of housing projects, from attainably priced rental apartments in major urban centres across the U.S., to townhouses in Durham, Ont., to the highest-end luxury condominiums in Yorkville. We have a luxury development at the corner of Yorkville Ave. and Avenue Rd. that we believe is going to provide a standard of luxury and exclusivity in Toronto closer to what you might expect in Manhattan or London. At the other end of the spectrum, we’re buying a large parcel of land in Lindsay, Ont.—500 acres of land for 2,700 homes. These are two totally different developments for different markets, but we’re equally excited about them.
What are the greatest challenges in real estate development?
There are so many moving parts and push-pulls in real estate development that if you’re not truly attuned to how they all work, it can create considerable risk. You’re managing municipal approvals, timing, efficiency of building design, and costs and revenue. Then there’s marketing and carefully managing your inventory and costs relative to the timeline of the project. These are all things that we spend a lot of time focusing on with our developer partners, because that’s how you manage risk and ensure successful outcomes for investors.
Windsor-Essex real estate market slows down — so sellers pulling out all the stops – CBC.ca
Windsor’s sizzling real estate market is seeing a slight slowdown — and it means sellers have to up their game to draw people in.
Prices are still high in Windsor-Essex but realtors say more listings over the last several months are leading to fewer offers on individual homes, putting buyers in a better position with more options and less competition.
“When buyers have more choice, sellers have to do a little bit more to stand out from the crowd,” explained Danial Malik, a broker at ReMax Preferred.
“They have to do more in terms of professional photography, videography, staging. They want to make sure there’s as many eyes as possible on their property, so it gets sold for top dollar.”
The average price of a Windsor-Essex home in September was $552,186, according to data from the Windsor-Essex County Association of Realtors. That’s 27.4 per cent more than September of last year.
Listings have also doubled from what we saw at the beginning of the year (1,035 listings in September compared to 475 in January).
One home stager says business has doubled
“Things have picked up quite a bit,” said Julie Kapitan, owner of Lemon Tree Living, a home staging company in Windsor-Essex.
At the start of the year, there was a “buying frenzy,” and homes were selling quickly with or without staging, she said.
“But something shifted I think in May and June and the calls started to come in,” Kapitan said.
Her business has doubled since then.
She said it helps people imagine living in the space.
‘Property has to stand out’
Aditya Soma with the WinCity Real Estate Team says staging is “crucial” for any sale.
“There is more inventory,” he said.
“That means your realtor and your stager, you know, have to do a fantastic job by pricing it right, by presenting it well to attract as many buyers as possible.”
Soma added that some sellers list their homes and try to sell without a stager, and later realize they need to “revamp” their approach in order to get the offer they’re hoping for.
Malik explained that he’s also seeing more cancellations of listings in recent months. That’s because, given the trend of the last year or so, expectations are very high for sellers.
“They’re trying different realtors or they’re trying different strategies to get that dollar amount, whereas the property … may not be worth what they’re asking for,” Malik said.
WATCH | Broker Danial Malik on what the current market means for buyers:
Hence, there’s a stronger lean toward marketing tools like home staging — though it can be a pricey option, depending on what you need.
Kapitan explained that staging could start at $1,000 if accessories are the only items required by the seller. However, if furniture is required, home staging could cost $5,000 or more depending on the size of the home.
She also works with house flippers in the community to help them get the best possible price.
Flippers turn to stagers
Jami Jacklyn, a partner at M & J Doors Ltd., a St. Thomas company that flips houses, recently acquired a Windsor home that cost them close to $200,000, they invested between $30,000-$50,000 into renovations. After listing the home for $199,000 and using Kapitan’s home staging service, it recently sold for more than $100,000 over asking.
“Previous, in my real estate career, I didn’t think it was important, to be honest. I’ve sold houses before,” Jacklyn said.
“Now that we’re doing this in more volume, I have a massive respect for stagers and it has helped my business tremendously.”
Jacklyn explained that her company tries to choose “eyesores” in the community to flip in order to improve the neighbourhood, while still being able to sell the renovated property to first-time home buyers, even though the work on the home drives that price up.
But with or without a stager, Kapitan suggests depersonalizing your home by removing family photos, de-clutter, avoid patterns, use white linens and white towels, and clean so that your home is spotless.
Meanwhile, even though the lull in the market puts buyers in a better position, it’s still a seller’s market.
Hamilton mixed-use dev. gets height-limit exemption – Real Estate News EXchange
Ground has broken on the latest project in downtown Hamilton, a mixed-use development at 75 James St. S. which will tower more than 30 storeys and include over 500 residential units.
The Labourers’ International Union of North America’s LiUNA Pension Fund of Central and Eastern Canada (LPFCEC) holds 100 per cent interest in the development. Fengate Asset Management is the investment manager, developer and asset manager, while The Hi-Rise Group is the development manager and SG Constructors is the builder.
The Downtown Hamilton Secondary Plan states buildings shall not exceed the height of the Niagara Escarpment, which works out to about 30 storeys, but the partners applied for and received permission from the city to exceed the height restriction with the James Street building.
“Working collaboratively with city staff and local stakeholders, the building height was determined with consideration for relevant planning policies, precedent projects and addressing local housing needs,” Fengate managing director and group head of real estate Jaime McKenna said in an email exchange with RENX.
An application filed with the city called for a tower of up to 34 storeys.
Plans for the James St. S. property
The James Street site was formerly a bank and was acquired for an undisclosed price in 2018. It was assembled in 2020 with another site at 44 Hughson St. S. – which is the current home of the LiUNA Local 837 and LiUNA Central and Eastern Canada regional offices.
It’s still to be determined if the residential component of the development will be a purpose-built rental apartment or condominium. It will include office and commercial space and a heritage component.
“Due diligence is underway to determine the best model to meet residential needs in downtown Hamilton,” McKenna wrote.
The development will help address significantly increased residential needs in Hamilton from people of all ages and occupations, including students, millennials priced out of the Toronto market and retirees.
The residential units will range in size from studios to three bedrooms. Building amenities will include fitness facilities, party rooms, relaxation lounges, private rooftop green space and underground parking.
LiUNA and the development
“LiUNA is incredibly proud to be addressing the increasingly critical residential needs in Hamilton,” Joseph Mancinelli, LPFCEC chair, LiUNA International vice-president and regional manager for Central and Eastern Canada, said in an email interview with RENX.
“I myself, a Hamiltonian, have a personal passion for the future of our city, addressing current infrastructure needs that will continue to foster economic development, job opportunities and growth.”
Mancinelli said the location is transit-oriented and pedestrian-friendly, offering easy access to necessities, work, school and entertainment.
“Our LiUNA HQ of the Central and Eastern Region as well as the LiUNA Local 837 office at 44 Hughson will be seamlessly integrated into the development and expanded with new office space, keeping the artistic and historic façade of the front of the building, honouring the foundation and history of those before us,” said Mancinelli.
“Further, a number of live/work units will be provided, catering to local small business needs.”
A 2025 completion is being targeted for the development.
The development partners
LiUNA has half-a-million members across North America, including more than 140,000 in Canada, who predominantly work in construction.
The LPFCEC was established in 1972 and is one of the fastest growing multi-employer pension funds across Canada. Its diverse investment portfolio has more than $10 billion in assets.
Fengate Asset Management is an alternative investment manager focused on infrastructure, private equity and real estate strategies. It has a total asset value of more than $20 billion and offices in Toronto, Oakville and Houston.
Fengate Real Estate is involved with more than 75 properties and investments. The completed value of its portfolio is more than $9 billion and it has more than $4 billion in value under development.
The Hi-Rise Group is a fully integrated development and construction company that was founded in 1979. It initially functioned as a merchant builder that sold most of the projects it developed and built, but it now holds a number of properties across Ontario.
SG Constructors was founded by Matt Stainton and its management team has accumulated more than a century of experience working on construction projects.
The two-tower King William Residence in Hamilton and the revitalization of Yonge Eglinton Centre, Yonge Sheppard Centre, 66 Wellington St. W., 111 Richmond Street West and 180 Wellington in Toronto are among its projects.
Evergrande’s Proposed Shift From Real Estate To Electric Vehicles Fails To Convince – Forbes
Hui Ka Yan has finally revealed his plan to save China Evergrande. He wants the embattled property developer to shift its focus from real estate to manufacturing electric vehicles, but skepticism abounds.
Despite having never sold a vehicle, Hui’s aim is to turn away from Evergrande’s main business and become an EV maker within the next decade, the state-run Securities Times reported late Friday evening, citing an internal meeting held on October 22.
The proposal sent shares of his Hong Kong-listed EV unit, China Evergrande New Energy Vehicle Group, soaring as much as 17% on Monday before closing the day with a gain of 11.4%. But the company still trades at just a fraction of its peak market value of $86.7 billion that it reached in mid-April after tumbling 94% since then.
Analysts, however, have expressed their skepticism. It remains unclear whether Evergrande, now close to collapsing under $305 billion in total liabilities, has the expertise or capital to compete in China’s increasingly crowded EV field.
“Evergrande used to have a strategy of buy, buy and buy,” says John Zeng, a Shanghai-based director of China forecasting at consultancy LMC Automotive, referring to the property developer’s previous EV-related acquisitions. “Its approach was very simple and unpolished, and no one really knows how much technology it has mastered. ”
Hui currently has a net worth of $11.6 billion that is largely based on dividend payouts received over the years. He was a former steel factory worker when he first established Evergrande in 1997. Although he had no prior experience in producing EVs when he first announced his ambition to do so in 2019, he has since funneled more than $1 billion into a series of acquisitions that saw him gain control of National Electric Vehicle Sweden AB (NEVS) and buy a majority stake in battery maker Shanghai CENAT New Energy. The company said its first EV model Hengchi would be delivered from its Tianjin factory early next year, according to an October 11 post published on Evergrande’s website.
But its EV unit warned less than a month ago that it was encountering a “serious shortage of funds,” according to a September 24 stock exchange filing. The company said it had “suspended paying some of its operating expenses and some suppliers have suspended supplying for projects.”
Evergrande itself warned last week that there was “no guarantee” it will be able to meet its financial obligations. The company did not respond to emailed requests for comment.
Even if Hui eventually manages to begin producing EVs, how he would sell them is another question with no clear answer, says Yale Zhang, managing director of Shanghai-based consultancy Automotive Foresight.
“Building a sales channel from scratch is very capital intensive, and Evergrande doesn’t appear to have channels of its own,” says Zhang. “Plus, its current model is a concept car that is still quite some distance away from mass manufacturing and selling.”
Justin Tang, head of Asian Research at New York-based investment and advisory group United First Partners, says the billionaire may simply be trying to boost investor confidence. Hui also pledged during the same meeting to deliver Evergrande’s unfinished properties to homebuyers, saying the company “in principle” won’t buy land over the next ten years, and would reduce the scale of its property development business “by a large margin,” according to the Securities Times report.
The company said separately via its WeChat public account that its 40 real estate projects in places including Guangzhou and Foshan are progressing “smoothly and orderly.” Last week, Evergrande narrowly avoided default by paying a $83.5 million bond coupon just before a 30-day grace period was about to expire.
But Evergrande faces more interest payments down the road, and $3.5 billion of its offshore bonds are expected to mature in March. The cash-strapped company has been struggling to raise funds through asset sales and other means, and market doubts over whether it can meet its debt obligations continue to persist.
“Where is the money coming from?” asks Tang, adding that Evergrande “doesn’t have time as a friend,” and its proposal of saving itself by making cars has “lots of questions but no real answers.”
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