Foreign investors continue to gobble up Canadian commercial real estate: report – Financial Post

Investment in Canadian commercial real estate in the third quarter reached almost .2 billion, setting a record for any 90-day period and marking the second consecutive quarter for a new high, according to a report out Monday.

CBRE Canada said foreign capital continues to be a driver of the market with billion coming in from abroad to buy commercial property in the third quarter — 90 per cent of the amount directed at hotels.

It was the second straight quarter than foreign investors overtook private Canadian investors when it comes to deals of more than million. Investors from abroad accounted for 41 per cent of all activity compared to 24 per cent for private Canadians.

“On the year, foreign investment activity is now on level ground with private Canadian investors, each with roughly 30 per cent of transaction volumes,” said CBRE, in its report which noted pension funds were the third largest investor in the quarter with 18 per cent of all activity. Real estate investment trusts were down to 11 per cent.

CBRE said that for the year, there has been .4 billion worth of investment activity, a pace that would take the country to billion and a new annual record. The current record of .1 billion was set in 2007.


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‘Danger Report’: Real estate pros fret court could break lock on secret sales data – CBC.ca

There’s little doubt Canada’s real estate industry feels under siege these days.

Just check out the recent Danger Report commissioned by the Canadian Real Estate Association (CREA), which analyzes “negative game changers emerging in real estate.”

Top threats include people selling their homes without an agent, consumers pressuring agents to reduce their commission, and the prospect of making inside information — such as past selling prices of homes — widely available. 

“It kind of shows you what their fear is, and open data is really behind a lot of this,” says broker John Pasalis with Realosophy Realty in Toronto.

“They’re worried the agent is going to get cut out.”

Pasalis argues that worry is what’s driving the Toronto Real Estate Board (TREB) in its long and bitter battle with Canada’s Competition Bureau to keep certain sales data under lock and key.

John Pasalis Realosophy Realty real estate

John Pasalis with Realosophy Realty in Toronto says he’s ready to make public on his website once-protected real estate data. (Realosophy Realty)

Federal Appeal Court steps in

In April, the Competition Tribunal ruled that TREB was stifling competition by limiting access to information — including a home’s final selling price. Currently, Toronto real estate agents — and most agents across the country — control and provide this information to clients at their discretion.

The tribunal’s decision would enable brokers to make past sales prices and other data, like how long a home has sat on the market, widely available on Toronto real estate websites.

TREB, however, appealed the tribunal’s ruling. Federal Court of Appeal hearings in Toronto wrapped up on Tuesday, with no word yet on when the court will reach a decision.

One of the board’s main arguments is that openly posting a home’s final selling price compromises the privacy of sellers and buyers.

The ruling “opens the door to misuse and abuse of their sensitive personal financial information,” said TREB CEO John DiMichele in a statement in July.

But industry critics argue this case has nothing to do with privacy concerns. Instead, they believe this is TREB’s last gasp at trying to protect its 45,000 member agents from the digital era where consumers want more power and easy access to information.

Already in Nova Scotia, homebuyers can access price history for properties online.

“It’s about who controls the flow of information, and TREB wants it to be them and Realtors,” says Pasalis.

Toronto broker Fraser Beach agrees, calling the privacy argument “a smokescreen, a red herring that the real estate board keeps dragging in.”

‘It’s not private’

Since 2011 Beach has been supplying anyone who signed up with daily online reports featuring the final selling prices of Toronto homes.

But he shut it down in September after receiving a cease-and-desist letter from TREB’s legal counsel.

Beach argues that since Toronto agents can currently supply clients with past sales prices, the information is already out there.

“If [45,000] people have access to information which they can give to anybody they care to, it’s not private. There is no privacy issue.”

That’s not how realty consultant Ross Kay sees it. He claims a real estate agent handing over a few sold listings to a client is not the same as making the information widely accessible online.

“What that means is that every single personal detail in a home’s listing would be available to any major corporation or bank to download” and to mine for data, says Kay who lives in Burlington, Ont.

Real estate sign sold

Industry critics argue the Toronto Real Estate Board’s court battle has nothing to do with privacy concerns. (CBC)

Critics point out that anyone can go to the land registry office and find out what a home sold for. But Kay argues that at least that access won’t include sensitive information like revealing photos of the home included in the sold listing.

“You won’t have access to photographs of the little girl’s bedroom, you won’t have access to what kind of TVs that family purchases.”

Toronto domino effect?

The Canadian Real Estate Association also claims privacy is a legitimate argument.

In its submission to the Federal Court of Appeal, CREA sided with TREB’s position. It also repeated its argument that if the tribunal’s ruling stands, it should be limited to the Toronto area.

“Competitive and regulatory conditions vary across the jurisdictions of boards,” stated CREA in a court document.

Regardless of the arguments, real estate expert John Andrew believes the Competition Bureau will eventually get its way — and the effects will be widespread. 

“The writing’s on the wall,” the Queen’s University professor says. “It will be difficult to overturn the Competition Tribunal’s decision.”

Andrew also believes the tribunal’s ruling will have a domino effect across Canada, with other real estate boards starting to voluntarily release once-guarded sales data.

“Toronto will be precedent-setting — no question about it,” Andrew says.

‘Evolve or get left behind’

Even with more access to information, Andrew believes many people will still opt to hire an agent.

“Most Canadians really want an experienced person to hold their hand and guide them through the process,” he says.

However, he warns that the real estate industry needs to move with the times and embrace the idea of making more data easily accessible online, because that’s what consumers want.

He compares the situation to the taxi industry which ignored the technological revolution — until Uber came along and started stealing market share with electronic billing and an app to order your ride.

“You either evolve or you get left behind.”

‘Danger Report’: Real estate pros fret court could break lock on … – CBC.ca

‘Danger Report’: Real estate pros fret court could break lock on secret sales data

Final decision coming on Toronto Real Estate Board releasing coveted sales data

By Sophia Harris, CBC News
Posted: Dec 07, 2016 5:00 AM ET
Last Updated: Dec 07, 2016 11:23 AM ET

Foreign investors continue to gobble up Canadian commercial real … – Financial Post

Investment in Canadian commercial real estate in the third quarter reached almost .2 billion, setting a record for any 90-day period and marking the second consecutive quarter for a new high, according to a report out Monday.

CBRE Canada said foreign capital continues to be a driver of the market with billion coming in from abroad to buy commercial property in the third quarter — 90 per cent of the amount directed at hotels.

It was the second straight quarter than foreign investors overtook private Canadian investors when it comes to deals of more than million. Investors from abroad accounted for 41 per cent of all activity compared to 24 per cent for private Canadians.

“On the year, foreign investment activity is now on level ground with private Canadian investors, each with roughly 30 per cent of transaction volumes,” said CBRE, in its report which noted pension funds were the third largest investor in the quarter with 18 per cent of all activity. Real estate investment trusts were down to 11 per cent.

CBRE said that for the year, there has been .4 billion worth of investment activity, a pace that would take the country to billion and a new annual record. The current record of .1 billion was set in 2007.


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Planning to grow legal pot? Check real estate rules first – Globalnews.ca


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If Canada follows the path of most U.S. states that have legalized marijuana, we’ll be allowed to grow a moderate number of plants at home.


Global News

The upside is a plentiful supply of cheap marijuana; the downsides are the space requirements, the plants’ fussy need for just the right amount of light, water and fertilizer, higher power bills — and the strong, pervasive smell.

Another potentially delicate problem is selling your house.

READ: Smelly, fussy, humid: Why you may not want to grow your own legal pot

As the seller, how much do you have to disclose about the marijuana plants that you whisked out of sight for the open house? Different provinces have different rules.

The Real Estate Council of British Columbia recommends that selling agents encourage their clients to disclose in writing that a property has been used to grow pot, even if the grow was one of the legal and quite small ones that medical marijuana users are allowed.

“While marijuana for medical purposes may be grown legally with the necessary licence, the possibility remains that its growth could result in a property defect,” spokesperson Marilee Peters wrote in an email.

“If a property has been used for activities such as a marijuana grow-op and the property has not been properly restored, a material latent defect may exist in the form of toxic hazards that cannot be discovered on a reasonable examination of the property.”

READ: Why home marijuana cultivation will be a headache for regulators

What might a legal home grow look like?

Colorado allows residents to grow up to six marijuana plants each, of which half can be flowering at any given time. There is no state-level restriction on the total number of plants. Unless local bylaws ban it (some do), a household of four adults can legally grow two dozen marijuana plants.

And those plants can be huge. Home growers in states like Oregon and Colorado have been known to grow enormous plants to maximize production within the rules.

So, depending on what Canada’s rules turn out to be, Canadians could be able to run a fairly serious home grow op while also staying completely on the right side of the law.

WATCH: Residents in northeast Edmonton want a legal marijuana grow operation to leave their neighbourhood. But as Laurel Clark reports, they have no choice but to put up with it until at least April.






As recently as 2010, Toronto police were finding over 200 grow operations a year. They varied a lot in size, from a dozen plants to thousands. Much of the marijuana produced was intended for export to the United States, so Canadian production fell off as some U.S. states passed more tolerant laws.

Some houses used for large grow operations were damaged beyond repair. Growers crammed hundreds of plants into every available corner, cut through joists, created high-voltage wiring systems that bypassed electrical meters and left mould and pesticide residues in their wake. Some houses damaged by marijuana grows were passed on to unsuspecting buyers.

READ: Toronto’s vanishing grow-ops fall victim to pot economics

In Ontario, a seller is free not to mention having grown marijuana, so long as a grow didn’t cause damage that could endanger the buyer.

“The only time when the seller would be obliged to actually disclose something is if the defect in the physical property would place the future occupants at risk, if it’s an inherently dangerous property, or that it’s going to make the home uninhabitable due to problems,” explained Kelvin Kucey of the Real Estate Council of Ontario.

“The courts have consistently said that if there’s not a physical defect that’s going to impact on the habitability of the home or present an inherent danger, like if you know you have radioactive waste in your back yard.”

“If it’s a small-scale grow op, that doesn’t materialize, because there’s no damage to the property.”

WATCH: Toronto landlord fights tenants over medical marijuana grow op – tenants moved out and he’s stuck with hefty cleanup bill






On the other hand, it would be wise to get rid of the plants, legal or not, before the house is shown.

“You’d want to make your house as saleable as possible, so you would want to remove those things, just like you’d want to remove any kind of arguably offensive material in the home – you can do a shopping list of what other people may find offensive. So you’re not limiting your market to people who are thinking of having their own home grow op.”

A federal government task force asked to study the details of what legal marijuana would look like in Canada delivered its long-awaited report Wednesday. It will be made public in mid-December.

One of the issues it was studying was whether to allow home production, and if so, under what rules.

© 2016 Global News, a division of Corus Entertainment Inc.


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Foreign investors continue to gobble up Canadian commercial real … – Financial Post

Investment in Canadian commercial real estate in the third quarter reached almost .2 billion, setting a record for any 90-day period and marking the second consecutive quarter for a new high, according to a report out Monday.

CBRE Canada said foreign capital continues to be a driver of the market with billion coming in from abroad to buy commercial property in the third quarter — 90 per cent of the amount directed at hotels.

It was the second straight quarter than foreign investors overtook private Canadian investors when it comes to deals of more than million. Investors from abroad accounted for 41 per cent of all activity compared to 24 per cent for private Canadians.

“On the year, foreign investment activity is now on level ground with private Canadian investors, each with roughly 30 per cent of transaction volumes,” said CBRE, in its report which noted pension funds were the third largest investor in the quarter with 18 per cent of all activity. Real estate investment trusts were down to 11 per cent.

CBRE said that for the year, there has been .4 billion worth of investment activity, a pace that would take the country to billion and a new annual record. The current record of .1 billion was set in 2007.


twitter.com/dustywallet

The CRA is cracking down on real estate tax dodgers in Canada’s red hot market – Financial Post

Evidence of the ongoing crackdown by the tax authorities on Canada’s red hot residential real estate sector is everywhere, from recently updated statistics that show increased real estate audit activities, to new rules governing the sale and reporting of your principal residence and even some recent tax cases.

Earlier this year, the Canada Revenue Agency indicated that transactions in the Greater Toronto Area have been the subject of greater scrutiny, including audits, for some years and that, more recently, the CRA has been actively monitoring and auditing real estate transactions in British Columbia. The CRA is focused on a number of areas of compliance risk in the real estate sector, which include: questionable sources of funds, property flipping, unreported GST/HST on the sale of new or substantially renovated properties, the new housing rebate and unreported capital gains.

Sean Kilpatrick/The Canadian Press

Since April 2015 to the end of September 2016, the CRA indicated that in Ontario it has completed the audit of 13,403 files resulting in a recovery of 0.4 million. In B.C., during the same period, the CRA audited 2,366 files, resulting in .3 million in recovered tax. The CRA also charges a penalty equal to 50 per cent of the additional tax payable if a taxpayer knowingly makes a false statement when filing a return. During this period of increased audit activity, the CRA applied 663 penalties, totaling .5 million, with the highest single penalty being nearly .5 million.

“It is hard to imagine how the presence of someone living in the house could not be apparent to prospective buyers looking at a brand new never-lived-in home

Last month, in an effort to gather data about the dispositions of principal residences, the CRA reversed its longstanding published administrative policy that said you did not have to report the sale of your principal residence on your tax return if you were eligible for the principal residence exemption. Starting this year, the CRA said that it will only allow the PRE if you report the sale and designation of principal residence on Schedule 3, Capital Gains of your return.

The CRA is also pursuing, and winning, tax cases against individuals involved in real estate transactions. Take, for example, the most recent case, decided earlier this month involving the GST/HST new housing rebate, which allows an individual to recover some of the GST or the federal part of the HST paid for a new or substantially renovated house.

One of the main conditions to be eligible for the new housing rebate is that you must buy or build the house for use as your or your relative’s primary place of residence. In addition, if the intention at the outset is to flip the property, you won’t be eligible for the rebate.

The recent case involved an Ontario couple that attempted to claim an HST new housing rebate for a house they purchased in Milton. The purchase agreement was dated in October 2011 for a price of about 5,000. The purchase of the house closed on April 10, 2013 and it was immediately listed for resale on April 21, 2013 for 7,000 as a “Brand New Never Lived in Home.” The house sold shortly thereafter for about 0,000.

The CRA denied the couple’s claim on the basis that the couple never lived in the home when they bought it nor did they ever intend to based on the location of the house relative to where they then lived and worked and relative to where they later bought a different type and size and value of house into which they did move.

The couple argued in tax court that when their “financial and employment circumstances … changed, they decided they had to sell the new house by the time it was built but that her mother-in-law had moved into the house in the interim.” A relative living in the home would have satisfied the condition for the rebate.

Both the CRA and, ultimately, the Judge had serious doubts that the mother-in-law ever moved in since both the house’s listing and the advertising refer “in unqualified terms to the fact that the house was brand new and never lived in.” As the Judge wrote, “It is hard to imagine how the presence of someone living in the house could not be apparent to prospective buyers looking at a brand new never-lived-in home. It is equally hard to imagine a realtor taking such a risk.”

The judge reviewed the home’s utility bills for the short period of ownership. The gas bill showed an almost immaterial gas consumption, and the hydroelectric and water bills showed minimal amounts of electricity used and “0.00 cubic meters of daily water use.”

As a result, the judge denied the couple’s claim for the HST new housing rebate. He also pointed out that this was consistent with the CRA’s assessment of tax on the gain on the sale of the house, as opposed to a tax-free gain as a result of claiming the principal residence exemption.

Financial Post

Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Wealth Strategies Group in Toronto.

Bubbles and booms in Canadian real estate – REM | Real Estate Magazine

Canadian real estate continues to experience an exciting boom in some markets, caused by some powerful positive forces in our economy. But it could be destroyed by ignorance, false comparisons and superficial research and analyses.

Our media has been prone to publishing fallacious articles about what is happening here ever since The Economist magazine used some outrageous assumptions and misleading criteria in their 2012 global property value comparisons.  Since then other (lazy) economists wrote their own articles that were based on this initial presumptuous article and recently more articles have popped up to inflate the hysteria of a real estate balloon in Canada.




Our real estate clients are becoming increasingly worried by these articles and if our industry doesn’t set the facts straight they could panic the market into plunging over an imaginary cliff and set our whole economy back at least 10 years. Even our government agencies and political leaders are starting to believe the “bubble myth”.

Many so-called experts try to explain bubbles as a direct companion of inflation. But inflation is really caused by the wage price spiral that hasn’t recurred since the late 1970s in Canada.

Others correctly identified the U.S. property price bubble as an artificially produced property demand (on steroids) caused by unscrupulous mortgage lending policies by the two giant lending organizations and the co-operating banks. That bubble exploded when the excessively risk leveraged mortgage derivatives were exposed as worthless financial instruments.

Canadian banks never eased their lending criteria that require substantial income and equity standards to obtain mortgages. Thus our property values stayed consistent with normal economic activities.

However, prices of Canadian real estate have indeed increased substantially and many people can not acquire property under our traditional financial contexts of a 20 per cent down payment for a first mortgage.

Following the 2008 global and American financial debacle, Canada Mortgage and Housing Corp. (CMHC) caught a bit of the greed bug and endorsed five per cent down payment schemes bearing ridiculously high interest penalties, but the number of deals that were actually approved was a very small percentage of the market. We did not come close to inflating a real estate price bubble from overly stimulated housing demand.

This year the CMHC backed down to a more traditional 10 per cent down payment for people with a secure cash flow and thus eliminated the likelihood of any bubble pressure within our housing markets.

The bottom line is that if anyone puts the term “real estate bubble” in the same sentence as “Canada”, they don’t have a clue what they are talking about.

But a real estate boom is a totally different kettle of fish. What we are experiencing is extraordinary high demand in desirable Canadian markets and sub-markets. Social migrations are at the core of these elevated prices and quite frankly our overly regulated housing infrastructure has impaired our market supply in these key markets where more and more people want to live.

The Hong Kong immigration event pushed up Toronto and Vancouver prices in 1987 for a few years, but the American recession of 1990 created huge downsizings in corporate Canada and this created many sales under duress. House prices in the Toronto area stepped down by 27 per cent during the next six years. This was not a bubble bursting but a market supply/ demand rebalancing in the near term.

Booms are driven by strong demand and constrained supply, whereas bubbles are driven by greed and extreme leverage. Canada has the former and not the latter.

To comprehend Canadian property values, one must look around the world to see that people are changing countries at a rate commonly produced by wars and other traumatic events. Few destinations are attractive as Canada, especially our three largest cities. Actual immigration at over 300,000 is at least 30 per cent above our new home construction rate in the large markets. Also, drift into cities continues. Projected population growth rates in cities during the next 10 years are very significant. Thus, current market prices are supported, especially in the longer term.

Labour and skill shortages are commonplace across Canada so actual earnings are quite good for those qualified to work. First-time home buyers from middle class families have used family help in raising down payments, but those who can’t obtain financial assistance from their families can’t afford to buy homes, even at these extremely low mortgage interest rates.

As the baby boomers downsize, they will continue to help their children buy a first home and with apparently quite a few years of cheap money ahead, the buyers will be able to build decent equity for several years ahead.

Another market attribute is that the high demand markets pull up average selling prices, yet other markets still offer reasonable values. Values are also supported across Canada by homeowners who have been able to reinvest some equity for maintenance, updates and upgrades (a billion market) that improve property values.

Perhaps our most significant issue is political. With six levels of government interfering with free market activities in the housing industry the bureaucratic maze is intimidating to anyone without lawyers on retainer and corporate capital pools. Increasing housing supply for young families near industrial or commercial zones is barred from creative or innovative solutions. Infrastructure funding has been swallowed by the higher than average costs of our workers in the government and NGO sectors. Most of us also recognize a dozen or more other Canadian issues that restrain supply and affordability: excessive middle class taxation, monopolistic pricing of consumer goods and services, over-priced government services, under-productive government contracts, cronyism. . . .

A “housing bubble” is not one of them.

The CRA is cracking down on real estate tax dodgers in Canada’s red hot market – Financial Post

Evidence of the ongoing crackdown by the tax authorities on Canada’s red hot residential real estate sector is everywhere, from recently updated statistics that show increased real estate audit activities, to new rules governing the sale and reporting of your principal residence and even some recent tax cases.

Earlier this year, the Canada Revenue Agency indicated that transactions in the Greater Toronto Area have been the subject of greater scrutiny, including audits, for some years and that, more recently, the CRA has been actively monitoring and auditing real estate transactions in British Columbia. The CRA is focused on a number of areas of compliance risk in the real estate sector, which include: questionable sources of funds, property flipping, unreported GST/HST on the sale of new or substantially renovated properties, the new housing rebate and unreported capital gains.

Sean Kilpatrick/The Canadian Press

Since April 2015 to the end of September 2016, the CRA indicated that in Ontario it has completed the audit of 13,403 files resulting in a recovery of 0.4 million. In B.C., during the same period, the CRA audited 2,366 files, resulting in .3 million in recovered tax. The CRA also charges a penalty equal to 50 per cent of the additional tax payable if a taxpayer knowingly makes a false statement when filing a return. During this period of increased audit activity, the CRA applied 663 penalties, totaling .5 million, with the highest single penalty being nearly .5 million.

“It is hard to imagine how the presence of someone living in the house could not be apparent to prospective buyers looking at a brand new never-lived-in home

Last month, in an effort to gather data about the dispositions of principal residences, the CRA reversed its longstanding published administrative policy that said you did not have to report the sale of your principal residence on your tax return if you were eligible for the principal residence exemption. Starting this year, the CRA said that it will only allow the PRE if you report the sale and designation of principal residence on Schedule 3, Capital Gains of your return.

The CRA is also pursuing, and winning, tax cases against individuals involved in real estate transactions. Take, for example, the most recent case, decided earlier this month involving the GST/HST new housing rebate, which allows an individual to recover some of the GST or the federal part of the HST paid for a new or substantially renovated house.

One of the main conditions to be eligible for the new housing rebate is that you must buy or build the house for use as your or your relative’s primary place of residence. In addition, if the intention at the outset is to flip the property, you won’t be eligible for the rebate.

The recent case involved an Ontario couple that attempted to claim an HST new housing rebate for a house they purchased in Milton. The purchase agreement was dated in October 2011 for a price of about 5,000. The purchase of the house closed on April 10, 2013 and it was immediately listed for resale on April 21, 2013 for 7,000 as a “Brand New Never Lived in Home.” The house sold shortly thereafter for about 0,000.

The CRA denied the couple’s claim on the basis that the couple never lived in the home when they bought it nor did they ever intend to based on the location of the house relative to where they then lived and worked and relative to where they later bought a different type and size and value of house into which they did move.

The couple argued in tax court that when their “financial and employment circumstances … changed, they decided they had to sell the new house by the time it was built but that her mother-in-law had moved into the house in the interim.” A relative living in the home would have satisfied the condition for the rebate.

Both the CRA and, ultimately, the Judge had serious doubts that the mother-in-law ever moved in since both the house’s listing and the advertising refer “in unqualified terms to the fact that the house was brand new and never lived in.” As the Judge wrote, “It is hard to imagine how the presence of someone living in the house could not be apparent to prospective buyers looking at a brand new never-lived-in home. It is equally hard to imagine a realtor taking such a risk.”

The judge reviewed the home’s utility bills for the short period of ownership. The gas bill showed an almost immaterial gas consumption, and the hydroelectric and water bills showed minimal amounts of electricity used and “0.00 cubic meters of daily water use.”

As a result, the judge denied the couple’s claim for the HST new housing rebate. He also pointed out that this was consistent with the CRA’s assessment of tax on the gain on the sale of the house, as opposed to a tax-free gain as a result of claiming the principal residence exemption.

Financial Post

Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Wealth Strategies Group in Toronto.

‘Danger Report’: Real estate pros fret court could break lock on … – CBC.ca

‘Danger Report’: Real estate pros fret court could break lock on secret sales data

Final decision coming on Toronto Real Estate Board releasing coveted sales data

By Sophia Harris, CBC News
Posted: Dec 07, 2016 5:00 AM ET
Last Updated: Dec 07, 2016 11:23 AM ET