Could Montreal's real estate market be the next target for foreign investors?

[_mtler_]

http://www.cbc.ca/beta/news/canada/montreal/montreal-real-estate-tax-foreign-investors-vancouver-1.3704178

 

A new tax on foreign buyers in Vancouver has real estate agents predicting a spillover effect into other Canadian markets.

 

But it's unclear if Montreal, often an outlier when it comes to real estate trends, will be among them.

 

"I really don't think this is something that's looming for Montreal," said Martin Desjardins, a local realtor.

 

The market here is "nothing compared to what's happening in Toronto and Vancouver," he said.

 

The new 15 per cent tax, which took effect Tuesday, was introduced by the British Columbia government with the intent of improving home affordability in Metro Vancouver, where house prices are among the highest in North America.

 

Ontario Finance Minister Charles Sousa has said he is examining the possibility of a similar tax "very closely," as a measure to address Toronto's skyrocketing home prices.

 

Experts believe the Vancouver tax could exacerbate the booming housing market in Toronto and, potentially, affect other Canadian cities.

 

Brad Henderson, president and CEO of Sotheby's International Realty Canada, said some foreign nationals could turn to areas not subject to a tax — either elsewhere in British Columbia or farther afield.

 

"Certainly I think Toronto and potentially other markets like Montreal will start to become more attractive, because comparatively speaking they will be less expensive,'' Henderson said.

 

However, the Montreal market has so far remained off the radar of foreign investors.

 

France, U.S top Montreal foreign buyers

 

the Canada Mortgage and Housing Corporation said the number of foreign investors in the Montreal area is small and concentrated in condominiums in the city's downtown.

 

The report found that 1.3 per cent of condominiums in the greater Montreal region were owned by foreigners last year.

 

That number jumps to nearly five per cent in the city's downtown.

 

Residents of the United States and France accounted for the majority of foreign buyers, while China (at eight per cent) and Saudi Arabia (five per cent) accounted for far fewer buyers.

 

Francis Cortellino, the CMHC market analyst who prepared the study, said it's difficult to determine whether the Vancouver tax will change the situation much in Montreal.

 

"We're not sure yet what [buyers] will do," he said. "There are a lot of possibilities."

 

In Montreal, Desjardins said the foreign real estate buyers most often operate on a much smaller scale, often consisting of "mom and pop investors" or people from France looking for a more affordable lifestyle.

 

"I don't think it will ever be to the point where we'll have to put a tax," he said.

 

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Modifié 4 août 2016 par _mtler_

[Habsfan]

I completely agree with Mr. Desjardins. I don't foresee us ever needing an investor tax!

 

However, If this new tax in Vancouver does have a "spillover" effect in Montreal, I think it would be a good thing. Obviously, I wouldn't want it to be as bad as it is in Vancouver, but a few more foreign investors would be good for our city and the economy...not to mention, it would allow us to see some new towers go up in the core!

[fmfranck]

The effect definately could be felt in Montreal if Toronto also set up a similar tax. (which is not impossible since foreign investment that was first intended for Vancouver might now target Toronto instead)

[_mtler_]

So let's think of the investor whose soul purpose is the highest return possible.

 

Montreal real estate steadily grows more or less with inflation. In the short term, until prices start to drop in Vancouver and Toronto (if they implement a tax), you're still better off paying the tax and investing in those two cities.

 

Net of the 15% tax, your return is higher over there than in Montreal. So investors will continue the current trend until prices drops to a point where the annual returns are equal to the 15% tax. Only at that point, will Montreal be the more lucrative option.

 

 

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[ERJ-Boy]

That's an extremely basic assumption... But it makes sense. However let's not forget that there are numerous other factors in play here.

[SKYMTL]

Correct to all points. As a real estate investor myself, I have largely avoided Montreal and will continue to do so. There's just too many questions over the political situation, upwards spiraling taxes, infrastructure concerns, etc. to effectively make this city a possibility

 

While I hold a few small properties here, right now Halifax and Regina are where the smart money is going. Hugely undervalued markets; Halifax due to the thousands of skilled workers that will be needed for the upcoming Canadian Navy procurements through the 2030's and Regina due to their diversified mining, energy and agriculture sectors that have weathered the economic downturn quite well.

[fmfranck]

Correct to all points. As a real estate investor myself, I have largely avoided Montreal and will continue to do so. There's just too many questions over the political situation, upwards spiraling taxes, infrastructure concerns, etc. to effectively make this city a possibility

.

A real estate investor... professionnally? Or you just bought some shares in a trust? Because, of the reasons you've outlined, only the infrastructure one seems "fair-ish", but then again, it depends where you're buying in Montréal.

 

Property taxes are much higher in Regina (13.69$ for every 1,000$ of assestment) and Halifax (12.11$ for every 1,000$ of assestment) than they are for Montréal (8.27$ for every 1,000$ of assestmemt).

 

As for the political insecurity... we've had a libreral government for 13 of the last 14 years.

Modifié 9 août 2016 par fmfranck
typo

[Rocco]

Correct to all points. As a real estate investor myself, I have largely avoided Montreal and will continue to do so. There's just too many questions over the political situation, upwards spiraling taxes, infrastructure concerns, etc. to effectively make this city a possibility

 

While I hold a few small properties here, right now Halifax and Regina are where the smart money is going. Hugely undervalued markets; Halifax due to the thousands of skilled workers that will be needed for the upcoming Canadian Navy procurements through the 2030's and Regina due to their diversified mining, energy and agriculture sectors that have weathered the economic downturn quite well.

Buying a few fishing shacks here and there across Canada?

[SKYMTL]

A real estate investor... professionnally? Or you just bought some shares in a trust? Because, of the reasons you've outlined, only the infrastructure one seems "fair-ish", but then again, it depends where you're buying in Montréal.

 

Property taxes are much higher in Regina (13.69$ for every 1,000$ of assestment) and Halifax (12.11$ for every 1,000$ of assestment) than they are for Montréal (8.27$ for every 1,000$ of assestmemt).

 

As for the political insecurity... we've had a libreral government for 13 of the last 14 years.

 

Neither professionally nor through a trust. More of a retirement vehicle and something we do as a hobby.

 

Overall property taxes are actually (school, water, etc.) are actually lower once credits and other elements are factored into the equation. Regina has an extremely generous tax credit for people buying or building rental units. Halifax on the other hand will vary quite wildly for taxes from "Halifax proper" to its outlying communities like Bedford with many having specific rebates in place for things like recent eco-friendly renovations, in-line water heaters, green space, etc. The trick in those cities is to find properties with the right mix of tax "shelters" and suddenly you have extremely low property taxes.

 

As for the political instability, for the last few years it has been extremely stable but there is still that umbrella of potential investor threat that lies over the province. It is surely diminished but we still haven't been able to shake it after all these decades.

[ERJ-Boy]

It's actually a great way to invest. Very safe bet if it's for retirement safety net!! I recently bought an apartment building in St-Jérôme. It is the second property that we bought and so far we really like investing in real estate! It's fun!!!!