Canada Is Back On The Property RadarFor almost as long as it’s been there, Canada has been brushed off as “America-lite,” or the less important part of North America. It’s dull, a bit too peaceful, not intensely innovative (BlackBerry, IMAX, insulin, standard time and instant replay excepted), its taxes are crazy high and it’s more risk-averse than its southern neighbour. While all that may be true, those same traits have made it one of a handful of countries in the world considered the best to live in, it’s clean, diverse, socially progressive, the population is one of the most highly educated in the world (thanks to subsidised post-secondary education) and transparency, civil liberties and quality of life also rank near the top of international lists. Crime is generally low, health care is strong (subsidies again) and though unemployment is still too high, its cautious banking sector and existing federal surpluses (hello, taxes) helped it weather the GFC of 2008 better than most markets. It’s considered a safe haven for wealth, and it’s not even that cold all the time. The only thing it really has to apologise for is Justin Bieber. Sorry.

Boom Town
Despite being overshadowed by New York, London, Berlin, Tokyo and specific resort markets like Thailand and Vietnam, Calgary, Toronto and Vancouver are currently three of the strongest property markets in the world. Calgary is riding an energy industry high, Toronto is North America’s condominium leader — ahead of New York — and Vancouver is home to some of the country’s most expensive real estate.

Calgary has been called a one-horse town, but its horse is a substantial one. Alberta’s oil and gas industry has made Calgary a city that can rival any for affluence and economic activity. The current resource-dependent global economy has made the city Canada’s fastest grower, with low unemployment, high incomes and a magnet for labour. It’s not all resources however, and the city also counts services (related to resources), education and communications among its other industries. It’s location not too far from Banff, Lake Louise and the Rocky Mountains make it a destination for skiers and winter sports enthusiasts and also contributes to the city’s high standard of living for its one million residents.

The booming resources sector and the staff it attracts could account for Calgary’s resurgent condominium market. The Calgary Real Estate Board’s August report noted a 3.4 percent increase in condo and townhouse sales and a decline in home sales of 2.4 percent, though that is largely due to limited supply. “The record pace of August sales in the condominium sector is related to the relative affordability of this product combined with a tight rental market and low lending rates,” noted CREB chief economist Ann-Marie Lurie in the report. “More than 76 percent of condominium new listings are priced below CA$400,000 (HK$2.8 million) and represent more than 68 percent of the total inventory within city limits.”

Tower Town
In Toronto, it really is all about condominium apartments right now what with nowhere for the city to expand. With purpose built rental housing effectively dead, the rental market has become a private one. Demand is high and vacancy is relatively low, not surprising in the country’s economic hub. The Toronto Stock Exchange is the seventh largest in the world, something to be expected given the dominance of financial services in the city economy. But Toronto has a healthy mix of industries propping it up, including media and culture, IT, hospitality and manufacturing outside the city.

The indictors for investment are strong. Immigration is high, averaging 100,000 new residents each year putting the city on track to have population of over nine million by 2036, infrastructure upgrades (including a much needed airport rail like for 2015) are underway. Rental yields for condos are sitting at roughly 5 to 6 percent in the downtown core, where most of the future development is headed anyway. Currently, 150 apartment towers are in various stages of development in central Toronto. According to the Toronto Real Estate Board, the average sales transaction price for September was just over CA$570,000 (HK$4 million), an increase of 7.7 percent from the year before, with average gains for the year at 8.5 percent. None of that is expected to change.

Coastal Haven
Finally, Vancouver is a favourite investment spot for Asian buyers due to its relatively close proximity. Vancouver has been home to Canada’s priciest real estate for several years running as well as its representative lifestyle leader, regularly rivalling Melbourne for world’s most liveable city status. Perched on the west coast and home to slightly over two million, Vancouver is the location of the country’s largest and most vital port, it’s the western terminus of the transnational railway, and is the beating heart of Canada’s mining and forestry industries. Media is a rapidly growing sector and tourism is well entrenched.

Sales in Vancouver, like Calgary and Toronto, were up year-on-year in September by nearly 18 percent. Average prices across all property types are sitting at CA$630,000 (HK$4.4 million), but in houses, not apartments. In the Real Estate Board of Greater Vancouver’s September report, president Ray Harris stated, “Gains in home values are being led by the detached home market. Condominium and townhome properties are not experiencing the same pressure on prices at the moment.”

So which one is the right fit? As Jennifer Kay Chan of Forest Hill Real Estate in Toronto sees it, “Prices in Calgary are actually catching up to Toronto, though Alberta is a bit boom and bust, with the resources. Vancouver is very expensive; the lifestyle is great but it’s not quite as diversified economically. Toronto is looking at affordability issues, and bidding wars for properties are not helping.
But Taxes…

If you listen to anyone from Canada, they’ll make it seem like their taxes are the worst in the world, and they suffer more than anyone else on the planet. Sweden, Belgium, Austria, France, Denmark, Israel and yes, the US all have maximum income tax rates higher than Canada’s maximum 50 percent (assuming anyone that wealthy actually pays the full figure). The same can be said of Canadian capital gains, rental income and property taxes. “Our rental income tax and cap rate is based purely on capital gains and not on whether you’re a citizen, a resident or a non-resident,” begins Trowbridge tax consultancy’s Arun Nagratha. And the high tax rate, well, “It is a myth. It depends on where you are, but generally speaking [property taxes] are not as high as in other parts of the world. It can vary from region to region, but they’re not as high as people like to think they are.” To which any Canadian would say, “Sorry.”