There’s no shortage of people lining up to invest in the city’s burgeoning condo market — many of them mom and pop investors who see rental units as a hedge for their children against the increasingly unaffordable property market. Others are self-employed individuals without a pension who view a condo as an appreciating asset to help fund their retirement. But real estate experts are warning that the investment scene will shift in less than five years as the cost of condos continues to climb at the same time Toronto tenants show signs of hitting a wall when it comes to paying for an apartment.That will have significant cash flow implications for property investors because rent won’t cover the monthly carrying cost of those units, said Shaun Hildebrand, president of market research firm Urbanation.“I’m not sure that condo investors that have been active recently in buying pre-construction units fully appreciate how much supply is underway in the condo sector and what that will do for their assumptions for returns,” he said.Rents that rose about 10 per cent a year in 2016 to 2018, will likely increase at a more moderate 5 per cent annual for the foreseeable future, Hildebrand said.“For a little while it’s going to feel like we’re building enough rentals because there’s going to be a lot of investor-held units coming into the market but it’s going to be temporary,” Hildebrand said, as this year will see an unusually high number of rental units coming online. Condos represent about 35 per cent of Toronto’s rental housing market. Those who marvel at the city’s expanding skyline should prepare for 30,000 condo completions this year. That’s compared to about 20,000 last year. As many as 10,000 new condos could be ready for occupancy in the first quarter alone, Hildebrand said. On top of that, there will be 3,579 purpose-built rental completions in 2020. That’s not a hu ...
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