Condos are sprouting up across Toronto at astonishing rates, with the largest city in Canada reporting that it has over 100,000 units under construction. However, many residents in the area fear that some of the developments are being very poorly built and could become “the slums of the future”.
Condo prices in Toronto have soared by more than 25% over the past five years, but with investors flocking in to cash in on the boom as quickly as possible, many buildings are poorly constructed.
The lack of quality construction is evident, with glass panels already falling off newly built developments, including the luxury Trump towers and Shrangri-La. In addition, many of the new developments lack proper insulation and suffer from severe water leaks – pretty basic needs.
Ted Kesik, a professor of building science at the University of Toronto, said that many of the developments are already having to face reality.
“Many buildings that went up during the beginning of this condo boom are already facing high repair costs, and in many cases lawsuits, because they are built so shabbily,”
“The life cycle is clear. They are okay for the first five years, they gradually deteriorate by year 10 … and don’t even reach year 20 before significant remedial work needs to be done. In 50 years these buildings may well become an urban slum.”
The Trump Tower Toronto.
Builders and investors appear to be squeezing as much as they can from the boom, with the city’s rental vacancy rate at only 1.8 percent.
In most countries, owners of condos and other real estate property do better when they work with a property management company to increase rental income.
Investors who buy from a blueprint
Real estate brokers say that they mainly deal with investors who buy from a blueprint, increase their equity during construction, receive rental income and price appreciation for five years, and then sell it off to invest elsewhere.
Investing in the area is all about timing, with real estate brokers advising clients to get out before the five-year mark when the warranties are expired. Then again, for those who really want to take advantage of the prime location, there are still good listings in the Toronto condo market. One tip is to choose a developer with a stellar track record to ensure the quality of the property.
The Ontario government is aware of the problem, and has been for over a year now. In 2010 it said that developments would need to use better quality glass for balconies, yet the problem continues, with balcony glass panels falling off the 65-storey Shangri-La hotel and condominium building for the fifth time.
David Fleming, a condo buyer turned realtor, said:
“The Building Code is a joke, the Condominium Act is a joke. The City of Toronto relies on the permits, the fees for its tax base, and construction and condos are what is carrying the city. You do not kill the goose that lays the golden egg.”
Conrad Spezowka, a spokesman for Ontario’s Municipal Affairs and Housing ministry, said that the Ontario building code is reviewed every five years. It was most recently amended because of the glass problem.
