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High-rise condo buildings that are popping up in downtown Montreal have become a magnet for investors, but in many cases they’re a losing proposition, according to a report from the federal housing agency.
While rare a few years ago, high-rise condo buildings of a few hundred units have multiplied in the downtown of Quebec’s largest city, with more construction still being announced. In these large towers, some 57 per cent of owners are investors, almost twice the share as in regular condo buildings in the city center, Canada Mortgage & Housing Corp. said Tuesday.
Of those who bought with the intention to rent, and who made a 20 per cent down payment, the rent collected doesn’t cover operating expenses in a majority of cases, the agency said, adding operating expenses include mortgage payments, condo fees and taxes. Still, CMHC said some of these losses are only notional because some condos were purchased in cash and others with a much larger down payment.
High-rise condo owners are also more likely to put their units back on the market quickly, according to CMHC. Between January 2016 and September 2018, 7.2 per cent of the units were resold within 12 months, four times the share of other condo transactions in the city center. About 15 per cent of these quick resales came at a loss, according to CMHC, compared with 5 per cent in other buildings in the same district.
In an October report, CMHC estimated that 12 per cent of condo buyers in downtown Montreal since the start of 2018 were foreigners.