The financial industry's strength is attracting worldwide talent to Bay Street - and giving a big boost to the high-end real estate market
Paul Knight was certain his wife would not go for the house.
“I'm not even getting out of the car,” he told their real estate agent as they pulled up in front of a house on a leafy street in Rosedale.
Mr. Knight didn't have to wait long.
“This is the one,” Ann Dugan said as she emerged from a character-filled, 100-year-old house and got back in the car.
The couple and their three children are now unpacking the last of their boxes as they make themselves comfortable in their new roost.
At the same time, Mr. Knight is also settling into his new post as chairman and chief executive officer at UBS Canada, a global investment bank.
Born in Montreal, Mr. Knight is repatriating to Canada after a 20-year career in cities such as New York, Hong Kong and – most recently – London.
He's one of many bankers and investment professionals streaming back to Bay Street from some of the world's most prominent financial capitals.
The influx has spurred a resurgence in Toronto's real estate market – from mid-priced houses up to the highest echelons.
The speed and magnitude of the rebound in sales activity spurred the Canadian Real Estate Association (CREA) to lift its national forecast for the housing market in 2009. CREA is now expecting sales across the country to remain roughly flat compared with activity in 2008.
Previously, CREA had been expecting a 14.7 per cent fall in sales this year.
The association also points out that sales of more expensive houses will lead to a slight 1.5 per cent rise in the national average house price in 2009. The increased number of sales at the high end – rather than an actual swelling of prices – skews the national average price upwards.
CREA chief economist Gregory Klump says that low interest rates and strengthening consumer confidence have drawn buyers to the market. With no inflation pressures apparent, he expects interest rates to remain low for the next 12 months.
Mr. Klump says the suddenness of the arrival of a busy market in the late spring and early summer came as a surprise to industry watchers.
“Nobody expected this second quarter swing.”
Mr. Klump notes that many sellers took their houses off the market as they waited for conditions to improve.
Looking farther out, Mr. Klump expects listings to increase in 2010 as sellers see firmer prices in the second half of 2009.
Elise Kalles of Harvey Kalles Real Estate Ltd. and Jimmy Molloy of Chestnut Park Real Estate Ltd. have teamed up on the listing of a Rosedale estate at 338 Douglas Drive for $7.5 million.
It's the sort of property, with secluded ravine setting, generous rooms and lush gardens surrounding the pool that they hope will capture the attention of the international set.
“The only person in London who has this kind of privacy is Her Majesty,” quips Mr. Molloy.
Ms. Kalles and Mr. Molloy agree that they have seen a rebound in sales to the carriage trade after that tranche of the market languished through the spring of 2009. In May and June, sales of houses listed for $5-million and up suddenly took off.
“The banks are bringing them back,” says Ms. Kalles in describing two of her big sales this summer.
The two agents were also on opposite sides of a deal recently when Mr. Molloy represented a returning investment professional in purchasing a property sold by Ms. Kalles.
While banks in the United States and Great Britain have diminished or even disappeared in some cases, Canada's more staid big six chartered banks have remained steadfast in comparison.
“Our financial system has run a tighter ship,” says Mr. Molloy. “A lot of them are Canadians that went off to make their fortune,” he says of his roster of recent clients.
Meanwhile, some other big cities makes Toronto look very desirable right now. The city offers good schools, safety and security, he says.
Jonathan Buick is the managing director and founder of Toronto-based Harp Capital Corp.
The boutique merchant bank specializes in helping Canadian mining companies find joint venture partners out of Asia.
Mr. Buick says he regularly receives calls from ex-pats working in other cities who are job hunting in Toronto. His database of contacts, he says, has almost entirely rolled over as acquaintances lose or switch jobs.
Meanwhile, he's also heard from some London-based fund managers who are bringing their expertise back to Toronto.
“For anybody that's tied to commodities, this is the first place that will be revitalized.”
Mr. Buick currently has his house on Farnham Avenue near Avenue Road and St. Clair listed for sale with an asking price of $2.495 million. He has noticed that traffic through the house has increased noticeably in the past couple of weeks.
He's expecting that September will bring even more house hunters.
Mr. Knight was asked last spring to return to Toronto to help UBS rebuild its equities department and wealth management business here after the Switzerland-based bank suffered during the economic downturn.
He and Ms. Dugan quickly decided that they very much wanted to come home to Canada.
They made sure children Max, Tess and Seth Dugan-Knight could get into school in September, then began house hunting.
Mr. Knight was not familiar with the market, so he had his agent show him houses in neighbourhoods all over the map, from Lawrence Park to the Annex.
“He had to spend a lot of time driving me around.”
Mr. Knight noticed a marked change in mood between April, when the family first started their search, and the early summer, when they purchased their current home.
“In retrospect, that was the time to strike a deal,” he says. “People were nervous. We had a lot of nervous sellers.”
But Mr. Knight says he and Ms. Dugan were uneasy too. They didn't know the Toronto real estate landscape and the outlook was uncertain. They made offers on two houses that weren't accepted.
By the time they learned their way around the market, sellers were a lot more confident, he says.
“Toronto was – unfortunately from our point of view – clearly recovering.”
At the same time, the couple sold a house in suburban New York which they had purchased during their sojourn there before the stint in London. The New York area has not recorded the robust sales numbers that Toronto has.
“The worst thing you could do was sell in New York and buy in Toronto, which is what I did,” he says ruefully.
Still, Mr. Knight and his family love the new house, which is rich with character. They marvel at all of the nooks and crannies, he says, and a tremendously old oak tree stands outside.
“It's really enchanting.”
What really astonishes Mr. Knight is that he can live in such a verdant setting and yet still walk to the subway at Bloor and Yonge. In most other world capitals, even a tiny patch of green is almost unheard of in the city centre. Only the “stratospherically wealthy” could buy a house with a garden in New York, he points out.
“If you're looking for trees outside your window and a garden on your lot, it's very rare.”
Mr. Knight says he and his wife chose the house precisely because it maintains its traditional layout. It doesn't have the combination kitchen and family room, for example, that have become so prevalent in Toronto.
Whole studies, he says tongue-in-cheek, have been done on the necessities of the mud room.
“You wouldn't find that in London.”
They also saw a lot of houses decorated exactly the same. Again, that's not a phenomenon they've seen in London.
“I think we kind of rebelled against that.”
Instead, the family bought a house which they think suits them perfectly.
“To buy what we did in other cities – well it almost doesn't exist.”