GREATER TORONTO AREA LAND REPORT

Transcription

1 Research & Forecast Report GREATER TORONTO AREA LAND REPORT Fall 05

2 GTA Overview Market Overview In 05, the Greater Toronto Area (GTA) continues to experience a healthy volume of transactions from 04 and throughout 05. The developers remained to be the most dominant purchasers in the market throughout the year, representing 7 percent, followed by private investors at percent. Experiencing a slight decline in transaction volume in the Q 05 compared to Q 04, the market bounced back and experienced higher volumes of sales in Q and Q 05. Despite the similarity in the number of transactions involved, the total sum of transactions occurring since Q 05 to Q 05 were higher than the comparative quarters of 04. Purchasers were paying more per acre or per buildable square foot and the biggest comparative increase can be noticed in Q 05 (see graph). High density and low density land transactions remain to be the most popular type of land purchased, with medium density coming in a marginal third out of the three. Between high density and low density, the difference between the total amounts of transactions is minimal. High density continues to be very popular in the City of Toronto to accommodate the young adults and professionals and low density transactions mainly occurring in the other regions to accommodate for the more family-oriented purchasers. From the first quarter to the third quarter of 05, the total amount of transactions for high density was recorded at slightly above $ billion dollars and slightly above $. billion dollars for low residential land sales. The largest transaction by far in 05 occurred in the City of Markham at the York Downs Golf and Country Club. With Colliers International navigating the process from start to finish, the 47 acre property was sold for $4 million dollars and was the largest land deal the GTA has seen in a long time. In the near future, the golf course will be converted to a residential development to accommodate the growing population in the York Region. The second largest deal in 05 was another low density land purchase in Richmond Hill for slightly over $00 million dollars. The value per acre was actually higher in the second highest deal at slightly over $ million dollars per acre. Sale Transactions 04 vs. 05 (Q - Q) Total Sale Transactions 04 Total Sale Transactions 05 Total Number of Deals 04 Total Number of Deals 05 $,400 0 $,00 $, Millions $,000 $800 $600 $400 $00 $50.90 $459. $57.9 $794.4 $76.4 $ Total Sale Transactions 04 Total Sale Transactions 05 Total Number of Deals 04 Total Number of Deals 05 $0 Q Q Q Q4 0 GTA Total Land Transactions by Land Usage Type $,00 $,000 $,090.6 GTA Total Land Transactions by Land Usage Type $,4.0 $800 Millions $600 $400 $00 $0 $7.57 High Density Medium Density Low Density Research & Forecast Report Q 05 Greater Toronto Area / Industrial Colliers International

3 GTA Overview Purpose-Built vs. Condominium Developments in Downtown Toronto Throughout the year 05, there has been noticeable land purchases in the downtown Toronto area for high density developments. Previous market activities may have led market experts to presume that the developments would involve private condominiums to be built on the site. But the type of developments expected to finish by year 07 is beginning to suggest a move to purpose-built units. A different outcome than what the market has become accustomed to in the past years. The intended usage of the lands purchased in the recent past were mainly for mixed-use developments, comprising of private condominium units and retail space on the lower levels. However, the expected supply of condominiums begins to see a noticeable decline in volume from 05 to 07 and the expected supply of purpose-built developments begin to increase from 05. As a significant amount of the private condominiums are already used as investment properties, it is no surprise of the demand for rental units in the downtown Toronto area by the millennials and young professionals. Some developers are considering the possibility of building purpose-built developments that will offer similar amenities of a condominium (gym, swimming pool, party halls, etc.) and also provide on-site property management services. The number of units expected to be completed from now until 07 suggest a decline in condominium development and a growth for purpose-built developments. In 07, the expected supply of purposebuilt units will slightly exceed the supply of condominium units. However, caution is advised when considering this to be an upcoming trend as further observation is needed. Currently, there is still a stronger preference to develop residential condominiums as opposed to purpose built rental towers. The main factors that contribute to which asset to choose include the cap rate differential, financial risk and the equity source. With a usual 0% deposit by condominium purchasers, the risk is reduced for investors whereas investing into a purpose-built development requires more time for investors to realize their return on investment (ROI) due to the lack of the 0 percent deposit requirement. Due to the nature of the ROI, the developer and investor profiles for purpose-built projects tend to be more accepting of the relatively delayed ROI. It is also important to note that the purposebuilt developments are currently only occurring in peripheral areas such as King West and Queen West. This is due to the fact that greater financial gains are realized with purpose-built rentals versus condominiums on a price per square foot basis. Although the year 07 is expecting a slightly higher supply of purpose-built rentals than condominiums, further observation is required to see if this trend will continue. Downtown Toronto Condo vs. Purpose Built Under Construction Expected Completion Years PPurpose _ Built CCondominium ** The total amount of units displayed on graph does not include any units that are either planned or proposed. They include only developments that are physically under construction and being built.** Research & Forecast Report Q 05 Greater Toronto Area / Industrial Colliers International

4 City of Toronto Throughout 05, developers continue to be the most active purchasers in this particular market, representing 68 percent of the purchases and private investors come in second, representing 6 percent of the purchases. The focus area for the land purchases was in the west side of the downtown core, near King St. W and Queen St. W areas and also close to the Yonge and Bloor area as well. Both areas, especially Yonge and Bloor, provide easy access to the downtown core. Although the King West and Queen West areas do not have a subway line established, the availability of buses and streetcars still provide convenient access to the downtown core. City of Toronto 6% 5% Land Sale Trasactions (04 vs. 05) 69% Land Sale Trasactions (04 vs. 05) High Density Medium Density Low Density Developer Private Investor Other Q - Q 04 Total Transactions Q - Q 05 Total Transactions Price per Buildable Square Foot (High Density)04 vs. 05 $70.00 $60.00 $50.00 $40.00 $ $ $0.00 $0.00 $0.00 $ $/Buildable SF (High Density) Total Size (Acres) 80 City of Toronto Notable Sales ADDRESS CITY PRICE SIZE (ACRES) LAND USE TYPE PRICE PER ACRE/BUILDABLE SF PURCHASER PROFILE 5-59, 5, 59 King Street West Toronto $00,000,000.5 High Density Varies per Land Other 70-8, 57-6, Queen Street East, Richmond Street East Toronto $8,600,000. High Density Varies per Land Developer Galleria Mall Toronto $7,000,000. High Density $4.8 Developer 4 Research & Forecast Report Q 05 Greater Toronto Area / Industrial Colliers International

5 York Region York Region experienced approximately $ billion dollars in land sales, mainly consisting of low and medium density development lands. Excluding the City of Toronto, York, Durham and Peel/Halton region experience more low to medium density developments than high density developments. However, while both Durham and Peel/Halton Region tend to demand similar prices per acre, York Region continues to demand a significantly higher price per acre. A possible explanation for the significant difference in price per acre may be the proximity to Yonge Street, availability of public transit and also the types of homes sold in York Region may differ from the others. Therefore, the higher prices of homes in York Region may increase the value of the land. Average $/Acre (Low and Medium Density) $,500,000 $,6,507 $,000,000 $,500,000 $,000,000 $500,000 $69,065 $,00,545 $907,86 $609,669 $988,894 Low Density $0 Durham Region York Region Peel/Halton Region Medium Density York Region 5% 5% 70% Developer Private Investor Other York Region Notable Sales ADDRESS CITY PRICE SIZE (ACRES) LAND USE TYPE PRICE PER ACRE/BUILDABLE SF PURCHASER PROFILE York Downs Golf and Country Club Markham $4,860, Low Density $986,884.0 Developer 546 Leslie Street Richmond Hill $00,074, Low Density $,074,09.5 Other 090 Pine Valley Drive Vaughan $6,404, Low Density $878,5.0 Developer Research & Forecast Report Q 05 Greater Toronto Area / Industrial Colliers International 5

6 Peel & Halton Region Peel and Halton Region has experienced a total of 47 transactions this year so far. Oakville boasts the highest number of transactions, representing percent (5 transactions) of all transactions that occurred in 05. Oakville also has the highest average of land price per acre for medium density ($.55 million per acre), and third highest in low density land values ($759,70 per acre). The City of Milton has seen a significant decline in total transactions, recording only two transactions in 05 compared to nine in 04. One of the possible reasons is due to the fact that despite the large amount of land available, they are limited in terms of accessibility, road services and infrastructure and does not seem to be an attractive land in the eyes of developers. Peel / Halton Region Average Price per Acre by Land Usage Type $,000,000 $,800,000 $,600,000 $,508,5 $,550,000 $,400,000 $,00,000 $,000,000 $800,000 $600,000 $400,000 $54,896 $76,0 $74,09 $44,55 $40,75 $57,48 $9,6 $759,70 $00,000 $0 Brampton Burlington Caledon Halton Hills Milton Mississauga Oakville Low Density Average Price per Acre Medium Density Average Price per Acre Peel & Halton Region 7% % 8% Developer Private Investor Other Peel & Halton Region Notable Sales ADDRESS CITY PRICE SIZE (ACRES) LAND USE TYPE PRICE PER ACRE/BUILDABLE SF PURCHASER PROFILE 40 Bronte Road Oakville $60,000, Low Density $49,8.99 Developer 59 Humber Station Road Caledon $48,700, Low Density $490,4.5 Developer 59 Chinguacousy Road Caledon $40,000, Low Density $94,679.7 Developer 6 Research & Forecast Report Q 05 Greater Toronto Area / Industrial Colliers International

7 Durham Region Durham Region has experienced a total of 4 transactions in total so far in 05. Pickering and Whitby both experienced 4 transactions in total, and for both Ajax and Oshawa. Although both Pickering and Whitby experienced the same number of transactions, one of Pickering s transaction was for a high density development land. As Pickering is the most Western city in the Durham Region, it may be the first choice for Toronto residents looking to relocate to the East. Pickering is also expecting an airport and a casino resort which will be known as Durham Live in the near future. With these new projects being developed and the possibility of Pickering being the first to be considered by Toronto residents, we may continue to see more high density developments taking place in the city then the other neighboring cities in the Durham Region. Durham Region Sales Transactions by Land Usage 4 0 Ajax Oshawa Pickering Whitby High Density Low Density Medium Density Durham Region 7% 4% 79% Developer Private Investor Other Durham Region Notable Sales ADDRESS CITY PRICE SIZE (ACRES) LAND USE TYPE PRICE PER ACRE/BUILDABLE SF PURCHASER PROFILE 070 Dundas Street West Whitby $,67, Low Density $696,87.00 Developer Kingston Road Pickering $7,75, High Density $,5,56.00 Private Investor 80 Conlin Road East Oshawa $,00, Low Density $96,95 Developer Research & Forecast Report Q 05 Greater Toronto Area / Industrial Colliers International 7

8 50 offices in 67 countries on 6 continents United States: 40 Canada: Latin America: 4 Asia Pacific: 99 EMEA: 08 $. billion in annual revenue MARKET CONTACT: Ian Gragtmans Executive Vice President Sale Representative ian.gragtmans@colliers.com Kimberlee West Market Intelligence Team Leader Toronto kimberlee.west@colliers.com Sam Kwak Market Intelligence Coordinator Toronto sam.kwak@colliers.com Colliers International Toronto One Queen Street East, Suite 00 Toronto, ON Canada billion square feet under management 6,00 professionals and staff About Colliers International Group Inc. Colliers International Group Inc. is a global leader in commercial real estate services, with more than 6,00 professionals operating out of 50 offices in 67 countries. Colliers International delivers a full range of services to real estate occupiers, owners and investors worldwide, including global corporate solutions, brokerage, property and asset management, hotel investment sales and consulting, valuation, consulting and appraisal services, mortgage banking and insightful research. In 04 the firm handled $97 billion in total transaction value for 84,600 leases and sales. Colliers manages more than.7 billion square feet of commercial properties. Colliers International Group Inc. generates more than US$. billion in annual revenues. With significant insider ownership and an experienced management team, Colliers International has a long-term track record of creating value and superior returns for shareholders previously under the ownership of FirstService, and as of June 05, continuously as an independently owned company. The common shares of Colliers International Group Inc. trade on the NASDAQ under the symbol CIGI and on the Toronto Stock Exchange under the symbol CIG. collierscanada.com Copyright 05 Colliers International. The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.