The Weekly 411

TLDR:

📈 Canada's Rent Prices Hit Record Highs Again

💸 Toronto Officially Passes 9.5% Property Tax Hike 

🇨🇳 Evergrande's Asset Liquidation Affects Canadian Hotel

🏠 Republic Developments to Build 7,000+ New Homes in Scarborough

🤑 Brookfield Bets $15 Billion on Commercial Real Estate

📈 Canada's Rent Prices Hit Record Highs Again

• The average price for rent in Canada hit $2,196 last month, a 10% increase from 2023, marking another record high.

• However, Vancouver experienced a 3% decrease in rents compared to the previous year.

• Edmonton's rental prices grew at the fastest rate, with a 17.1% increase, averaging $1,479 for condo rentals

• Calgary's rents were up by 12.8% compared to the previous year, with an average price of $2,047.

• Vancouver has the highest average asking price for one-bedroom rentals, followed by Burnaby, and Toronto.

• Saskatoon was the least expensive city for a one-bedroom rental, with an average asking price of $1,192.

Why This Matters: Rental prices have increased by 20% compared to January 2020, two months before COVID-19 pandemic lockdowns began. Prospective buyers may face challenges in saving for a down payment while paying increasingly high rents.

💸 Toronto Officially Passes 9.5% Property Tax Hike 

• Toronto passed the 2024 budget on Wednesday, which includes a 9.5% increase in the residential property tax rate

• The average Toronto homeowner can expect an additional $338 in property taxes this year due to the tax hike.

• The proposed increase was lowered from the originally suggested 10.5% after concerns were raised by Toronto residents

• The budget also includes tax increases for other property types: 2.95% for multi-residential properties, 4% for commercial, and 8% for industrial.

Why This Matters: The passing of this property tax increase also raises the question of future tax hikes in Toronto. The increase in residential property tax rates can have a direct impact on the affordability of homes in Toronto. Real estate investors who own rental properties may need to adjust rental prices to account for the increased property tax costs 

🇨🇳 Evergrande's Asset Liquidation Affects Canadian Hotel

• Evergrande's $245 billion in worldwide assets were ordered to be liquidated by a Hong Kong court

• Château Montebello was a Canadian hotel purchased by Evergrande in 2014, marking its first major investment in the Canadian real estate market.

• The hotel, managed by Fairmont Hotels, is a popular destination for Ottawa residents.

• Evergrande's financial trouble has resulted in delayed maintenance and improvements at Château Montebello.

🏠 Republic Developments to Build 7,000+ New Homes in Scarborough

• The plan includes 14 towers ranging from 19 to 58 storeys in height, with the tallest towers surrounding a new central park.

• The development is situated on a triangular block of land bordered by St. Clair Avenue East, Danforth Road, Kennedy Road, and a rail corridor.

• 7,655 new homes will be built, with over 200 of them being affordable housing units.

• The site is currently occupied by warehouses, commercial buildings, and parking lots

• Scarborough Junction will feature 10 new development blocks, two public parks, pedestrian pathways, cycling networks, and public squares.

Why This Matters: The development of over 7,000 new homes in Scarborough Junction will likely lead to an increase in demand for housing in the area. Investors will benefit from appreciation of their investment properties as the master-planned community takes shape. However, the project’s success is also dependent on the electrification of the rail line to enable the new GO Station.

🤑 Brookfield Bets $15 Billion on Commercial Real Estate

• Brookfield, a Canadian asset-management giant, plans to raise $15 billion for a new real estate fund targeting commercial real estate

• The commercial real estate market has seen a decline in office prices due to changing work patterns, with office values down 25% in the past year.

• Brookfield has faced defaults on over $3 billion of US commercial mortgages, including famous properties like two Los Angeles office towers and Manhattan’s Brill Building.

• Despite these challenges, Brookfield is raising capital for a new real estate fund to take advantage of value deals across the globe.

Why This Matters: Commercial real estate has experienced a decline due to decreased office demand and a plunge in office prices. Still, the company considers the current market conditions as an opportunity to make contrarian investments. Brookfield emphasizes that high-quality real estate will hold value beyond the current downturn