With recent news that Ottawa is now outpacing the Greater Toronto Area (GTA) when it comes to foreign buyer activity in the housing market, we leapt at the opportunity to chat with Derek Nzeribe, Regional Director, Marketing & Business Development, Milborne Group, to learn more about housing in Ottawa.
Newinhomes.com (NIH): Why do you think there’s been an increase in foreign buyer activity in Ottawa? How will it affect the market?
Derek Nzeribe (DN): We are seeing a rise in foreign buyer activity in Ottawa from places such as Singapore, for several reasons. The main one is that Ottawa is well known as an international city and the capital of Canada. Most foreign nationals are familiar with Ottawa from their experiences filling out immigration documents or visiting the Canadian Consulate in their countries. This puts Ottawa on their radar.
In past years, foreign buyers have often chosen flashier cities such as Vancouver, Toronto and Montreal, but with job situations and home prices the way they are, Ottawa presents a more stable and affordable opportunity to enter the market. Remember that the federal government is a huge employer here, and there is new industry and business coming in all the time. In addition, the price of real estate in Ottawa is quite affordable compared to other capital cities in the world.
Foreign nationals purchasing as investments find our prices reasonable with a promising return-on-investment as the city’s market gets hotter. And keep in mind that in the City of Ottawa, foreign investors do not have to pay the 15% non-resident home buyer tax introduced by the Ontario government last year in the Greater Golden Horseshoe Area (which includes Toronto), or the similar tax implemented in Vancouver before that. It’s simply not an issue here in Ottawa.
NIH: To what degree are you seeing Investors from the GTA buying in Ottawa? Assuming your answer is that you are getting investors from the GTA, why do you think this is happening?
DN: We are seeing investors from the Greater Toronto Area buying in Ottawa for many of the same reasons we are seeing foreign buyers and investors interested in our city. Although our prices are rising here, they are still far less expensive than in Toronto. Many GTA investors are looking to diversify their financial portfolios, so as to not have all their eggs in one basket. The momentum in the GTA market is great, but these savvy entrepreneurs want to explore other options. Some are even looking for different product types. For example, they may own condominium suites in Toronto and purchase freehold townhomes in Ottawa.
Ottawa’s vacancy rate is very low at just 1.7%, and we are experiencing an increasing demand for rental accommodations – again, attractive to investors. We are even seeing an influx of renters from Toronto and Montreal who are being priced out of both the homebuying and rental markets, and are seeking relative affordability. In 2017, investor-friendly rental stock boosted condo sales by 20%. This trend is expected to continue without the wild fluctuations of cities such as Vancouver and Calgary.
NIH: What are the main differences between the Ottawa and GTA markets?
DN: From a residential standpoint, we’re looking at two very different lifestyles. In Toronto, where there are a lot of businesses and offices downtown, there are also a lot of people who want to live near their places of employment. Ottawa’s residential landscape is still comprised of people working downtown and living in the suburbs. We are starting to see that scenario shift here, with more people moving into the core. We’re probably where Toronto was several years ago, when there was a lot more commuting from the suburbs going on. Ottawa has the LRT coming in, as well as a lot of redevelopment in the urban core to encourage people to live there.
Our real estate is still significantly more affordable than in Toronto, and we have a steadier market. We also have a solid economy and a reliable homebuying market with the federal government employing so many people here. Home prices rise, but at a slower rate, which makes it appealing. Toronto’s new home/condo real estate is much more diverse than in Ottawa, but we are starting to see a move away from traditional buildings to more artistic façades. Toronto may be in a more evolved state than Ottawa, but we’re quickly moving in that direction.
NIH: Is Ottawa also struggling with low supply and strong demand?
DN: Yes, we started to see a shift in the market here around the last quarter of 2017. We are definitely in more of a seller’s market; we have very low inventory and high demand. A lot of people who have homes to sell are holding off because they are not sure what they’ll buy. The effect flows over into the new homes market. Buyers are coming in with an urgency to move quickly on available properties because they have not had much luck in the resale market. Buying new may be their first option or their second because they lost out on resale properties.
This will be a great year for Ottawa. We’re seeing a lot of good economic indicators in the marketplace driving sales. The job situation here is good, we have a lot of new industry coming into the city, and government spending on infrastructure to improve accessibility in the urban core is great. Ottawa is a government town where confidence is high. I don’t see this as a short-lived trend; it’s here for years to come.
NIH: Would you say first-time buyers in Ottawa have a wide selection of new homes?
DN: No, we’re struggling with the fact that there isn’t a huge variety of homes available, although more condominiums are coming onto the market. First-time buyers are being forced into traditional townhomes or standard condo suites — if they can find any. The good news is that builders and developers are coming together to look at alternative housing types that will appeal to that market.
Varying layouts and designs are incorporating open-concept and flex spaces to offer options. One example is Fresh Towns, three-storey townhomes that have outdoor private rooftop terraces and are affordable for first-time buyers. This community has been highly successful. First-time buyers have the opportunity to get into something a little different from their peers.
NIH: What are some of the busiest areas for new home developments in Ottawa?
DN: In the West End, Westboro has seen the biggest increase in growth. In fact, anything as you travel west toward Kanata is proving desirable. The area has a vibrant tech industry with new companies and a lot of jobs opening up. People want to locate close to these places of employment.
The southern area of Ottawa is also growing, as are surrounding cities in that direction. These communities have easy access to highways, for one thing. Kemptville is an example of an adjacent city with a growing residential marketplace. We are seeing a lot of new development (including condominiums) geared to senior-style living such as Kemptville Landing and eQuinelle, where senior bungalows are located on a golf course.
The Canadian Forces Base (CFB) area is also interesting. That base was classified as surplus land by the federal government a while ago. They ended up handing it over to Canada Lands Corporation for a development plan. It has become somewhat of a master-planned infill community. Several builders, such as Mattamy Homes, have an interest in developing the area.
NIH: What new condo developments are you currently working on and what type of buyers are you seeing/expecting?
DN: Fresh Towns is Greatwise Developments’ community at Baseline Rd. and Morrison Dr. in Nepean, nestled into a mature residential neighbourhood. We are seeing the spectrum of home buyers choosing to purchase here. Many are first-time buyers who find prices in nearby Westboro out of reach, but find Fresh Towns attainable.
We are also welcoming people moving from an older townhome to a new one here, as well as active empty-nesters who want to lessen the maintenance of a larger detached home. Others want to upgrade from the current townhome they are in, and they find the Rooftop Collection at Fresh Towns appealing. The community is so successful, that new designs have just been released, and groundbreaking will take place at the end of May.
Another incredibly popular community we are working on is Arthaus, the mixed-use community that is the result of a joint venture among the City of Ottawa, DevMcGill, The Ottawa Art Gallery, Group Germain and the University of Ottawa. The condominium sits atop the first Le Germain Hotel in the city, next to the greatly expanded Ottawa Art Gallery and a new theatre being programmed by the University of Ottawa.
There are only a few suites left at Arthaus. People are moving into the finished building. The art gallery, hotel and restaurant are open, and the community is exactly what we envisioned. When you consider that we started promoting it and selling only two years ago, sales have been fantastic. The community truly offers something different architecturally in Ottawa, and has been well received. More developers are now creating mixed-use communities elsewhere in the city.
This spring, we will introduce a new community called Monocle. Situated in the heart of the popular Westboro neighbourhood, this boutique condo by Ashcroft Homes will focus on quality, finishes, lifestyle and very efficient, spacious layouts. It will be aimed towards those who are downsizing from large detached homes. Many of these potential buyers want to travel, yet still enjoy plenty of living space at home.
In addition, Monocle will satisfy the market’s desire for more outdoor space. Every unit will feature substantial outdoor area. Nearly 25% of the building is outdoor space. People will be very pleased and surprised when they see the designs. Within a park setting, Monocle will be set back from the busy street to provide a peaceful, calm environment, yet will be close to all of the amenities in Byron Park.
A big thank you goes out to Derek Nzeribe for taking the time to paint us a better picture of the Ottawa housing market and highlighting a few exciting new home developments in the works!