Image Source: Vancouver by Marc M on 500px
According to a recent Bloomberg article, this is where the rich are putting their money today:
“The two greatest stores of wealth internationally today is contemporary art….. and I don’t mean that as a joke, I mean that as a serious asset class,” said Fink. “And two, the other store of wealth today is apartments in Manhattan, apartments in Vancouver, in London.”
In case you wondering, Laurence Fink is the founder and CEO of BlackRock Inc., which today is the largest asset manager in the world. They have over $4.77 trillion in assets under management according to their website. That’s a mind boggling number.
And if you read the Bloomberg article cited above, you’ll see that this interest in both art and apartments represents a shift away from gold as the de facto safe haven.
“Historically gold was a great instrument for storing of wealth,” the chairman of BlackRock Inc. said at a conference in Singapore on Tuesday. “Gold has lost its luster and there’s other mechanisms in which you can store wealth that are inflation-adjusted.”
What’s interesting and probably most relevant to the Architect This City community though is this investment focus on apartments.
When people talk about a possible housing bubble in Canada they often cite house prices to median household income as a key ratio. The question then becomes: How can house prices be such a high multiple relative to local incomes?
That’s relevant, but it’s not the entire story for cities like New York, London, and Vancouver. That ratio alone assumes that real estate isn’t a global investment vehicle. And for some people people it is exactly that.
I’m giving away a free t-shirt on April 1st, 2015 exclusively to Architect This City subscribers. There’s no catch. And no this is not an April Fool’s joke! I just want to say thanks to the people who read ATC on a regular basis. It’s that simple.
So how does it work?
You need to be an Architect This City email subscriber (either daily or weekly). If you’re not yet a subscriber, you have until midnight on Tuesday, March 31st, 2015 to make that happen. You can do that by clicking here. It’s free.
You need to visit architectthiscity.com and pick the t-shirt you want. There are currently 5 different ones to chose from (the original ATC tee comes in both ATC orange and black).
Finally, you need to leave a comment at the bottom of this post telling the community 2 things: which t-shirt you want and your favorite thing about your own city. That’s it.
On April 1st I will randomly select somebody from the comments, check to see if they’re a subscriber, and then send them a free t-shirt.
Simple, right? I’m really looking forward to giving away a t-shirt.
Over the past week I’ve had 2 separate people ask me my thoughts on the future of the condo market in Toronto. One of them was working on a University study and one of them was trying to figure out what (condo) property managers would look like in the future.
To be clear, the questions weren’t motivated by the typical “bubble” debate that the media loves to headline, rather these were questions about the long term future of condos in this city.
I haven’t written about this topic explicitly, so today I thought I would summarize my responses for the Architect This City community. There’s probably a touch of aspiration in the responses I gave, but it’s more or less what I’m thinking and what I believe has a good chance of happening over the next 10-20 years.
Here are some of my thoughts (not an exhaustive list):
Intensification is going to continue in Toronto and that is going to mean more condominiums and other types of multi-family dwellings. Rental apartments is the product type du jour right now within the real estate community.
As intensification continues, I think we’re going to see a tipping point in the near term with more families opting to have and raise children in condos in the city. Part of this will be driven by a desire to stay in the city (walkable communities), but part of it will also be driven by the economics (i.e. high price) of low-rise housing in the city.
As families begin to fill in condos (not just young single professionals and empty nesters), we’ll see developers and cities respond with more family friendly buildings, amenities, and program choices. This could mean anything from children’s play spaces within buildings to redesigned public spaces and parks.
In line with this shift, I think we’ll also see more sophisticated executions of “mixed-use.” Rather than just stacked uses (retail at the bottom, a few levels of office, and a residential condo tower above), developers and operators are going to start thinking about the ecosystem they are creating. (Related discussion in the comment section of this post.)
It’s probably a bit safe to predict that sustainability will become more important going forward. But I think that as more families and long-term end users opt for condos, that consumers will become more interested in building and energy performance. Technological advancement (both hardware and software) will also give this a boost.
Finally, and this applies somewhat to real estate in general, I believe that we’ll see a lot more openness and transparency all across the industry. There will be much better access to data and information. Similar to above, this will be aided by advances in technology and networks.
Now it’s your turn. What do you think of the above list? And what will the condo market — either in Toronto or in your city — look like in 10-20 years?