Downtown Toronto core fetches highest ROI

by Neil Sharma on 25 Sep 2017
The downtown Toronto core is where investors can expect to fetch the best return on their condo investments, because of better crafted suites, the core’s myriad amenities and its swift access to underground transit.

TheRedPin put together a list of the city’s 25 best intersections at which to buy, and not surprisingly the majority fall within the core, bounded by Spadina to the west, Jarvis to the East, Bloor to the North and Front to the south.

According to Hyder Owainati, TheRedPin’s communication manager, the Yonge-University subway line is replete with sound investment opportunities. “Around those intersections,  (condos) carry a premium,” he said. “Yonge and Dundas, Carlton and Gerrard carry a premium on the market.”

Conversely, condos around Spadina and King, while still strong investments because of surrounding amenities, aren’t directly connected to the city’s underground transit system and, therefore, fetch slightly lower ROIs than units around the Yonge-University line.

“Direct subway access is always big for investors, but even if you’re a little east but along the streetcar line, you still have triple-A transit access for your ROI,” continued Owainati.

While the Yonge corridor carries Toronto’s safest  investment properties, ROIs decrease north of Bloor St. because subway stations are scarce. However, uptown in the bustling Yonge and Eglinton neighbourhood, investment returns begin experiencing gains.

“For renters, sometimes they’ll say, ‘I want to live right by the subway,’ but if you look north of Bloor, a subway stop has a huge impact,” said Owainati. “Location is one thing, but the quality and size of units are also key. Yonge and Queen has very small units. While you’re paying less money and it looks cheaper, in reality the condos are much smaller. Studios around Yonge and Dundas are under 500 square feet.”

The most expensive units in the city are around Bay and Adelaide, because of the concentration of luxury buildings, and, unsurprisingly, Yorkville. While the luxury market is smaller, it remains a strong investment in Canada’s largest city and economic powerhouse.

“The luxury market is not necessarily a bad investment,” continued Owainati. “You’re just getting  a smaller market. It’s a different strategy than buying a general condo at City Place, for example.”

In all, condominium units at key downtown core intersections fetch 22-23% more than the city-wide average.

According to TheRedPin’s analysis, average condo prices in August were down 6.5% from April, and there has been a 31.2% diminution in sales during the same time period.

“I would say if you’re an investor in general, you have a two- to five-year timeline if you’re leasing a unit,” continued Owainati. “Rental rates are still strong, though, and they’re still going up. If you’re talking about selling over a couple of years, condos are still growing very strong. Sales are down, but prices aren’t.”

Paul D’Abruzzo, an investor and sales agent at Rock Star Real Estate, agrees the core has strong investment potential, but says Liberty Village and the East Bayfront are his favourite neighbourhoods in which to invest.

“You can’t go wrong buying stuff up and down Yonge St. and University Ave., but you’re going to pay more,” he said. “But I like Liberty Village because of the amenities around and it’s close enough to downtown, and it attracts a younger crowd.

“Some of the stuff they have just recently built on the east side along the lake makes it an up-and-coming area, especially as the Donlands develops. It’s the next big area in the city for sure.”

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