Investing in Canada: the advantages and prospects of Montreal
Montreal is an island city. Environmentally friendly, safe and comfortable to stay. City of festivals, exhibitions, sports competitions … It attracts millions of tourists, ordinary people who come here to live and work, and, of course, investors.
The local residential real estate market is diverse: condominiums, single-family cottages, apartment buildings, townhouses, chalets, and even apartment-hotels. And all this is claimed. According to official statistics, two thirds of Montreal residents rent housing. In some districts, this figure reaches 73%. Residents of the city form a stable demand for rent, which makes local housing very attractive for investors, including from abroad. But that is not all.
In 2018, more than 100 development projects were launched, many of which were destined to change and beautify the face of the city. For example, Victoria sur le parc is a modern office and residential complex that will become the tallest building in Montreal, and MAA condominiums & penthouses with its characteristic aristocratic features, and the Royal Mount and Cite Mid-Town projects launched in November 2018 in the heart of the island.
Since 2017, against the introduction of a tax on the purchase of real estate by non-residents in Vancouver and Toronto, the demand for objects in Montreal from buyers from overseas has increased significantly. This, in turn, led to a systematic increase in real estate prices and a significant change in the proportion of supply and demand.
Expectedly, some experts began to fear the market is overheating. Indeed, in some districts of Montreal in 2018, the rise in prices for certain types of real estate reached 30%.
But objectively speaking about the bubble is early. The average cost of housing in the city is several times lower than in the same Vancouver – $ 450 thousand versus $ 1.5 million for a single-family house. The growth potential is still great, and therefore – the opportunity to earn.
Rents are still lagging behind prices. Today, the yield from rental housing is relatively low – 3-5% per annum. Although in some individual cases it can reach 10%. The main prospects are associated with the subsequent resale.
At the same time, real estate investments in Canada mean at the same time several types of income: from rent (cash flow), from growth in market value, from a decrease in debt to the bank, if the object is acquired with a mortgage.
With relatively low loan rates – in Canada for foreigners it is 3-4% – the percentage component in the structure of the annuity payment (in equal shares) is not so significant. Due to this, since the first year there has been a significant reduction in debt. This makes it possible to refinance the paid part of the loan and use it as a down payment for the purchase of another object, that is, to replenish its investment portfolio.
The decisive factor for a successful investment is the right choice of object. If we are talking about a large business project, then the most profit will be given to apartment buildings. For a family project, the best option is condominiums. They will not require the direct participation of the owner, as they are managed by the administration, which is much more convenient.
An important role is played by the location of the object. The greatest demand is for real estate in the center, as well as in picturesque quiet areas near water, parks, forests. The proximity to good educational institutions, transport and shopping centers is highly appreciated.
Competently select the right object will help a certified broker. Only they in Canada have access to a special database, which contains complete information on all the objects that are on the market of a particular province, as well as about the objects sold. This makes it possible to carry out a detailed analysis of the market and carry out a comparative analysis of the market value of real estate, including rental rates.