Now that the results from Paris' first round of municipal elections are in, I thought I would do a follow-up to my post from a few days ago (which was mostly about bicycles). The second and final round happens this weekend, but here's what we've learned so far:
Emmanuel Grégoire (Union of the Left) is in the lead with 37.98% of the vote:
And Rachida Dati (Union of the Right) is in second with 25.46% of the vote:
What is not unexpected, but super interesting nonetheless, is the clear divide between the west and east within Paris proper. The west voted right, and the east voted left.
Here in Toronto, our voting maps typically exhibit a semi-clear divide between "Old Toronto" and the inner suburbs. For example, these are the results from our 2023 mayoral by-election:
Conveniently, it is a divide that loosely tracks the city's built form. If you live in the oldest parts of the city, where transit usage is higher and there's rail in the middle of the street, there's a higher probability that you voted for Chow. The inner suburbs, on the other hand, tended to vote for Bailão.
In the case of Paris, there isn't the same built form contrast. This is not an urban-suburban divide; it's a socio-economic divide. The western arrondissements have historically been the wealthiest areas of Paris (for a variety of reasons), and that continually appears in the voting patterns.
It also shows up in the modal splits. The western arrondissements tend to have higher car ownership rates compared to the east. These basic facts are interesting because Paris represents more of a controlled urban experiment, in contrast to Toronto's dense downtown and otherwise generally low-rise built form.
But in the end, I'm not sure the political mappings of Paris and Toronto are all that different. If you look closely at Toronto's 2023 by-election map, you'll see that the wealthiest pockets of the city voted exactly as you would expect. Turns out, bank balances may matter more than built form.
Cover photo by Maximilian Zahn on Unsplash
High Art Capital recently announced the launch of a new fund called the Greater Toronto Area (GTA) Rental and Affordable Housing Initiative. It has been anchored by a $300 million mezzanine debt commitment (and a "nominal equity investment") from the Building Ontario Fund (BOF) and is expected to be capitalized in total with a minimum of $1.3 billion.
The objective is to acquire approximately 2,200 rental homes in blocks within newly completed, unsold condominiums across the GTA and convert them into long-term rental housing. Included within this will be approximately 550 affordable rental homes that are expected to be title-protected at rents set at the lower of 25% below local market rent or 30% of median gross household income.
This is interesting, but it's certainly not the first example of investors buying, or wanting to buy, excess condominium inventory. However, it may become the largest in Toronto and, as far as I know, it's the only one to partner with the public sector (BOF is a provincial Crown agency).
The way it is intended to work is as follows:
Condominium developers are sitting on unsold inventory and maybe on inventory they took back after purchasers defaulted (and which may be subject to legal action). What High Art will do is say to developers, "Hey, if you give me a really awesome deal, I'll take 50 of those condominium units off your hands." And if the developer is desperate enough, they will say, "Sure, that sounds good. Let's do a deal and then go for a nice closing dinner."
But at what price?
As we've talked about many times before on the blog, developer pricing is typically based on a cost-plus model. We take our costs, add a margin, and there's the final sticker price. The reason prices haven't fallen as much as one might expect on unsold units is because they're hitting the "cost floor"; developers don't want to lose money, unless they are given no other option.
It is well known that the majority of Singaporeans live in public housing (that is, housing provided by the Housing and Development Board, or HDB). However, what you may not know is that the majority of residents obtain their housing through a model that shares some high-level similarities with the way we deliver new condominiums in Toronto.
In 2001, the HDB introduced a program known as Build-to-Order (BTO). The way it works is fairly straightforward: the HDB announces a new project, prospective buyers apply and are assigned a queue number, and then, if they're selected, they get to buy. Once a sufficient number of "pre-sales" have been obtained, the project begins construction, and buyers get a brand-new, subsidized apartment in 3 to 5 years.
Singapore also mandates that the apartments must be owner-occupied and so, in this carefully controlled delivery model, supply very closely mirrors demand. This is different from traditional condominium pre-sales where some buyers might be end users, some might be planning to rent out the home, and some might want to sell immediately upon completion. In those markets, the risk of overbuilding and speculative volatility is greater.
Now that the results from Paris' first round of municipal elections are in, I thought I would do a follow-up to my post from a few days ago (which was mostly about bicycles). The second and final round happens this weekend, but here's what we've learned so far:
Emmanuel Grégoire (Union of the Left) is in the lead with 37.98% of the vote:
And Rachida Dati (Union of the Right) is in second with 25.46% of the vote:
What is not unexpected, but super interesting nonetheless, is the clear divide between the west and east within Paris proper. The west voted right, and the east voted left.
Here in Toronto, our voting maps typically exhibit a semi-clear divide between "Old Toronto" and the inner suburbs. For example, these are the results from our 2023 mayoral by-election:
Conveniently, it is a divide that loosely tracks the city's built form. If you live in the oldest parts of the city, where transit usage is higher and there's rail in the middle of the street, there's a higher probability that you voted for Chow. The inner suburbs, on the other hand, tended to vote for Bailão.
In the case of Paris, there isn't the same built form contrast. This is not an urban-suburban divide; it's a socio-economic divide. The western arrondissements have historically been the wealthiest areas of Paris (for a variety of reasons), and that continually appears in the voting patterns.
It also shows up in the modal splits. The western arrondissements tend to have higher car ownership rates compared to the east. These basic facts are interesting because Paris represents more of a controlled urban experiment, in contrast to Toronto's dense downtown and otherwise generally low-rise built form.
But in the end, I'm not sure the political mappings of Paris and Toronto are all that different. If you look closely at Toronto's 2023 by-election map, you'll see that the wealthiest pockets of the city voted exactly as you would expect. Turns out, bank balances may matter more than built form.
Cover photo by Maximilian Zahn on Unsplash
High Art Capital recently announced the launch of a new fund called the Greater Toronto Area (GTA) Rental and Affordable Housing Initiative. It has been anchored by a $300 million mezzanine debt commitment (and a "nominal equity investment") from the Building Ontario Fund (BOF) and is expected to be capitalized in total with a minimum of $1.3 billion.
The objective is to acquire approximately 2,200 rental homes in blocks within newly completed, unsold condominiums across the GTA and convert them into long-term rental housing. Included within this will be approximately 550 affordable rental homes that are expected to be title-protected at rents set at the lower of 25% below local market rent or 30% of median gross household income.
This is interesting, but it's certainly not the first example of investors buying, or wanting to buy, excess condominium inventory. However, it may become the largest in Toronto and, as far as I know, it's the only one to partner with the public sector (BOF is a provincial Crown agency).
The way it is intended to work is as follows:
Condominium developers are sitting on unsold inventory and maybe on inventory they took back after purchasers defaulted (and which may be subject to legal action). What High Art will do is say to developers, "Hey, if you give me a really awesome deal, I'll take 50 of those condominium units off your hands." And if the developer is desperate enough, they will say, "Sure, that sounds good. Let's do a deal and then go for a nice closing dinner."
But at what price?
As we've talked about many times before on the blog, developer pricing is typically based on a cost-plus model. We take our costs, add a margin, and there's the final sticker price. The reason prices haven't fallen as much as one might expect on unsold units is because they're hitting the "cost floor"; developers don't want to lose money, unless they are given no other option.
It is well known that the majority of Singaporeans live in public housing (that is, housing provided by the Housing and Development Board, or HDB). However, what you may not know is that the majority of residents obtain their housing through a model that shares some high-level similarities with the way we deliver new condominiums in Toronto.
In 2001, the HDB introduced a program known as Build-to-Order (BTO). The way it works is fairly straightforward: the HDB announces a new project, prospective buyers apply and are assigned a queue number, and then, if they're selected, they get to buy. Once a sufficient number of "pre-sales" have been obtained, the project begins construction, and buyers get a brand-new, subsidized apartment in 3 to 5 years.
Singapore also mandates that the apartments must be owner-occupied and so, in this carefully controlled delivery model, supply very closely mirrors demand. This is different from traditional condominium pre-sales where some buyers might be end users, some might be planning to rent out the home, and some might want to sell immediately upon completion. In those markets, the risk of overbuilding and speculative volatility is greater.
But for this rental fund model to work at reasonable costs of debt, I suspect that, in many/most cases, deals will need to be struck below a developer's cost basis. So, it'll be very interesting to watch how this fund deploys capital and who the winners and losers are in this market.
Regardless, I think it is good that we are seeing this sort of activity. The faster we deal with the pain, the faster we'll get to the other side.
Cover photo by Patrick Boucher on Unsplash
HDB classifies the apartments themselves into three groups: Standard, Plus, and Prime. This classification is meant to reflect the locational value of certain projects; but importantly, the intent is that they're all equally attainable to citizens. The difference is that "choicer" locations (their vocabulary — now you have a new Scrabble word) require greater subsidies to make them affordable, and so they come with additional obligations.
For example, in the case of Prime flats, there is a subsidy recovery upon any future sale (I'm told it's between 6-9% of the first resale price), the minimum occupation period (MOP) is 10 years (versus 5 for the Standard class), and you can never ever rent out the whole home, even once the MOP has lapsed. Once again, this is about strictly matching new supply to end-user demand.
It's a lot of rules. But in Singapore, the majority of people accept them in exchange for affordability.
Cover photo: Tengah, Singapore via Monocle
But for this rental fund model to work at reasonable costs of debt, I suspect that, in many/most cases, deals will need to be struck below a developer's cost basis. So, it'll be very interesting to watch how this fund deploys capital and who the winners and losers are in this market.
Regardless, I think it is good that we are seeing this sort of activity. The faster we deal with the pain, the faster we'll get to the other side.
Cover photo by Patrick Boucher on Unsplash
HDB classifies the apartments themselves into three groups: Standard, Plus, and Prime. This classification is meant to reflect the locational value of certain projects; but importantly, the intent is that they're all equally attainable to citizens. The difference is that "choicer" locations (their vocabulary — now you have a new Scrabble word) require greater subsidies to make them affordable, and so they come with additional obligations.
For example, in the case of Prime flats, there is a subsidy recovery upon any future sale (I'm told it's between 6-9% of the first resale price), the minimum occupation period (MOP) is 10 years (versus 5 for the Standard class), and you can never ever rent out the whole home, even once the MOP has lapsed. Once again, this is about strictly matching new supply to end-user demand.
It's a lot of rules. But in Singapore, the majority of people accept them in exchange for affordability.
Cover photo: Tengah, Singapore via Monocle
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