SOTHEBY’S CEO: TORONTO IS THE BREAKAWAY LEADER IN CANADIAN LUXURY REAL ESTATE PERFORMANCE

by | Jan 20, 2022 | Listings for sale, Real Estate

We’ve talked a lot about the state of the luxury real estate market in Canada, especially the Toronto real estate market, and the insane numbers in residential sales heading into 2022.

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Sotheby’s International Realty Canada just released their 2021 Year End Top-Tier Real Estate Report. It’s an extension of what we were told all last year. The inventory squeeze is what it is, and is the core market driver. That and the ongoing economic recovery, low mortgage rates, plus more interest from international buyers.

More and more, Canadians look at real estate as their retirement foundation. It’s safer, more stable, especially in this country. Perhaps that’s also more a reflection of the psychological impact from two years of worldwide pandemic, sickness, death, lockdowns, and economic upheavals. Right?

Luxury real estate: Sotheby’s report highlights

In a nutshell, in terms of highlights in the Sotheby’s Canadian luxury real estate report, Toronto remains the leader in residential sales. Vancouver and Montreal broke records despite inventory constraints. And international buyers are looking at Calgary more.

More specifically, overall, a “significant” deficit of conventional and luxury housing “severely” constrained sales and the housing mobility of Canadians. In the Greater Toronto Area, $4 million-plus residential sales soared 224% year-over-year. Ten million dollar-plus sales were up 238%. Mind-numbing. Sotheby’s reports that sales in the City of Toronto over $4 million and $10million were up 188% and 173% respectively.

Vancouver property sale: History-making

In Vancouver, there was a 171% annual gain in sales of homes over $4 million. And they set the highest mark for gains in sales of properties over $10 million – 240%. Included in there was this regional record-breaking deal, the highest single family residential sale on a single lot. The property was Belmont Estate (below), a 21,977 square foot home (five bedrooms and 123 bathrooms), on 1.28 acres of land, in Vancouver’s Point Grey neighbourhood. Details of that sale remain private.

Sales in Montreal over $4 million surged 171% year-over-year, also breaking records, according to the Sotheby’s report. Approximately one in four $1 million-plus sales were in the luxury condo market, a new high. And economic recovery revitalized Calgary as tightening market conditions drove 222% annual gains in residential sales over $1 million.

Q+A with Don Kottick, CEO and President of Sotheby’s International Realty Canada

As per usual, we like to take things to the top dog, to get his or her thoughts. In this case that’s Don Kottick, president and CEO of Sotheby’s International Realty Canada:

What from the report surprised you the most?

What surprised me most was the performance of the Greater Toronto Area in relation to the other major Canadian markets. The GTA emerged as a breakaway leader in Canadian luxury performance with $4 million-plus residential sales rising 224% year-over-year. And $10 million-plus sales increasing 238%.

2021 marked a year in which local ultra-high-net-worth consumers redefined the concept of luxury real estate for the region and for Canada. Today’s affluent consumers are seeking an elevated calibre of architectural excellence, design, technology, service and amenities.

For example, the GTA luxury condominium market saw increased demand for expansive “mega-units” equipped with international-calibre, ultra-luxury amenities and services. Those include private entrances and elevators, spacious outdoor spaces, on-call concierge and sommeliers, full spa facilities, state-of-the-art fitness and recreational facilities.

What kind of impact do you think expected upticks in interest rates this year will have on a bullish luxury market?

Low-interest rates led to increased demand for Canada’s luxury and conventional housing markets in 2021. However there has also been a transformative change in Canadians’ perceptions of the importance of their homes. The pandemic has reinforced the importance of home as an investment in lifestyle and pleasure, physical sanctuary and security.

As a result, we expect the  Canadian luxury real estate market to continue to endure, particularly as borders open, releasing international pent-up demand.

Do you see any other market headwinds?

The greatest risk to slowing the market down would be the government introducing demand-side policy measures to try to address housing affordability, such as the introduction of new taxes or changes to the principal residence tax exemption. This would have the unintended consequence of reducing supply by discouraging homeowners from putting their homes on the market, Therefore that would increase the barrier of entry for new homeowners.

We saw in the latter half of the year that supply shortages were amplified. Potential sellers were discouraged from placing homes on the market due to concerns about their ability to secure a new home that would match increasingly lofty prices and desired lifestyles.

The scenario that we are seeing with price gains and housing affordability is due to the fact that demand and support are critically out of balance.

Top image: Sotheby’s listing, via Instagram (@canada_sir), 1166 Bay Street, #1805, Toronto

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