akoustas
Senior Member
- Joined
- Dec 16, 2012
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Many of these investor countries face strict capital controls, particularly China. The only way you can send money abroad or invest is by buying real-estate. The problem is, unlike other asset classes, a real-estate bubble presents a huge cost to the public if it bursts. The tech crash was bad, but the recovery was quick, the USA and Europe haven't even come close to recovering from the financial crisis (spurred by the housing crash) 5 years in.
In Toronto's case you have people just buying blocks of apartments in a building through a foreign property managment firm without even seeing the unit and dumping the cash in. This provides a perverse incentive to builders as they just meet the criteria of investors (nice lobby, amenities, granite counter tops) and skip the details like craftmanship and efficient use of space. This inflates prices and rewards shabby worksmanship. All units are rentals meaning nobody in the building gives a damn, and in 20 years the place will be a disaster.
In Toronto's case you have people just buying blocks of apartments in a building through a foreign property managment firm without even seeing the unit and dumping the cash in. This provides a perverse incentive to builders as they just meet the criteria of investors (nice lobby, amenities, granite counter tops) and skip the details like craftmanship and efficient use of space. This inflates prices and rewards shabby worksmanship. All units are rentals meaning nobody in the building gives a damn, and in 20 years the place will be a disaster.
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