Stay Focused Long Term
Investing in any asset class right now is a scary proposition. No matter where you look, the current environment feels like “doom and gloom”. Many are questioning if every asset class like the stock market, real estate, gold, bitcoin, etc. will hold up or if there are more tough times ahead. More important for us, we want to know if the Toronto condo market is doomed post Covid-19.
Toronto Is Attractive Internationally
All the things that made Toronto an attractive city to own real estate, especially investment condos, and the factors that led to market growth have not gone away. We actually expect these to increase post Covid and when the country fully opens up again because Canada has once again demonstrated that it is a safe, boring country – which is a good thing!
Canadian Values
Toronto greatly benefits from the existing social safety net and the response from all levels of government to support people during this difficult time. Our value system is not just about making money and being successful. Our “Canadian values” tend to be more measured, more considerate. Nice has a value. Canada is seen as trusted and neutral around the world and we are creating our own distinct brand as a country.
Diversity
People are drawn to Canada because of the fact that it’s diverse, inclusive, humble, and the international allure is real. There is a different social contract in this country – we’re collaborators, we work together, and that’s what sets us apart from my other cities. In fact, Toronto is one of the most multi-cultural cities in the entire world and offers the ability to intertwine as one which is a unique value it has to offer.
Urban Innovation
MaRs (Medical and Related Sciences) in downtown Toronto, the largest urban innovation hub in North America, has more than half of all company founders born abroad. These people saw opportunity in Canada and are establishing high-tech companies with well paying jobs and creating new industries.
In the US, nearly 40 percent of Nobel Prizes in chemistry, medicine, and physics since 2000 were immigrants to the United States. Immigrants have founded nearly 55 percent of America’s start-up companies, employing tens of thousands of Americans. It is proven that immigrants are very often incredible entrepreneurs!
Immigration
For developed countries, declining fertility rates and aging societies are a looming challenge in the decades ahead. Canada is no exception and we are depending on immigration to keep the economy growing. Immigration will be critical to our long-term success and to the economic recovery post-Covid. Our government policies clearly focus on bringing new people to the country, especially high-skilled workers, that will further build and diversify our economy.
To contrast Canada’s approach to other’s, the US has a program that allows US companies to employ skilled workers in specialty occupations, called H1-B Visas. In the US, approvals dropped from 94% of applications in 2015 to 76% in 2019 and the wait time went from five months to nearly 10. The equivalent Canadian program approves 95% of applications in two weeks or less.
Just this week the US suspended the H1-B, and several other visa programs. For those H1-B Visa holders who have been laid off or are no longer eligible — many American tech workers – now only have 60 days to leave the US. A company called MobSquad hires H-1B holders who were unable to renew their visas, sets them up with a Canadian equivalent job, gives each one a desk in its Calgary coworking space, and contracts them back to their original US employers as virtual workers. They had over 30,000 applicants in the first 18 months of offering this program!
Capital
Canada is well structured from a financial perspective with strong government regulation, a solid banking sector, and it has never had a currency crisis. Many countries like Russia, Argentina, and Venezuela are seeing their currencies rapidly devalued or are in the midst of a financial crisis, related mainly to declining oil prices due to Covid-19. People in these situations need to find a safe place to protect their capital.
Right now, the goal is basic wealth preservation – not growth. Post Covid-19, Canada will continue to be a magnet for international capital because it is safe and boring and has a strong central banking system; safety is a particularly important currency in these uncertain times.
Investment
The 7 largest market cap companies in World in 2020 were: Microsoft, Apple, Amazon, Alphabet/Google, Alibaba, Facebook, Tencent. These are all tech companies or related to online sales. Toronto is a magnet for tech talent and as a result, has added more new tech jobs between 2013 and 2018 than any other North American market. Our diverse, very well educated workforce is paid in Canadian dollars and represents an amazing, affordable pool of talent to many international companies, especially those located in the US.
The Zurich of North America
Long-term, Covid-19 is going to be a blip in the Toronto market. Canada has a stable government, is socially safe, and is an extremely attractive place for people to invest their capital. In uncertain times, capital preservation becomes the most important goal which usually means putting capital into stable, boring investments. Toronto is a unique city globally and represents a “blue chip investment” that will continue to emerge as a top real estate investing destination.
Like the CEO of Shopify recently said, “Canada Is Awesome”.