The Greater Toronto Area (GTA) continues to be a hotspot for high-density developments, characterized by fluctuating land prices and evolving market dynamics. Whether you're a developer, investor, or simply interested in the real estate market, this analysis offers valuable information to help you navigate the current landscape and make informed decisions. Join us as we explore the latest trends and projections shaping the future of GTA's high-rise developments.
High-Density Land Prices in the GTA
The first quarter of 2024 revealed significant shifts in the high-density land market:
Average Price Per Buildable Square Foot (PBSF):
In Q1-2024, the average price was $106 PBSF, marking a 22% increase from Q1-2023 ($87 PBSF).
Compared to Q1-2022 ($112 PBSF), there was a slight decrease of 5%.
These fluctuations illustrate the variable nature of land prices influenced by factors such as geographical location, property size, and planning status.
Price Fluctuations
The market for high-density lands has shown a downward trend due to several factors:
Expensive Land Debt: Higher borrowing costs are impacting developers' ability to finance new projects.
Vendor Reluctance: Sellers are hesitant to lower prices despite market pressures.
Decline in Demand: There has been a noticeable decrease in the demand for new condominium apartments.
Land Prices in the '416 Area' and '905 Area'
‘416 Area’ (City of Toronto):
Q1-2024 average price: $135 PBSF, up 14% from Q4-2023 ($118 PBSF) and 26% from Q1-2023 ($107 PBSF).
Prices have surged by 57% from the five-year low of $86 PBSF in Q2-2023.
‘905 Area’ (Suburban GTA):
Q1-2024 average price: $42 PBSF, a 19% decrease from Q4-2023 ($52 PBSF) and a 16% decrease from Q1-2023 ($50 PBSF).
These contrasting trends between the urban '416' area and the suburban '905' area highlight the diverse market dynamics within the GTA.
High-Rise and Mid-Rise Apartments
In Q1-2024, the average land value for both high-rise and mid-rise apartments was $106 PBSF, a 15% increase from 2023 ($92 PBSF) but still below the long-run average of $108 PBSF. The average property size in Q1-2024 was 0.83 acres, smaller than the long-run average of 1.62 acres.
High-Rise Land Price: $106 PBSF in Q1-2024, above the long-run average of $97 PBSF.
Mid-Rise Land Price: $105 PBSF in Q1-2024, 6% higher than 2023 ($99 PBSF) but 13% lower than the long-run average of $120 PBSF.
These insights emphasize the importance of understanding market conditions and geographical factors when assessing land values for high-density developments.
The Q1-2024 GTA High-Rise Land Insights Report underscores the dynamic nature of the high-density land market in the Greater Toronto Area. With varying prices influenced by economic conditions, financing costs, and market demand, staying informed is crucial for making strategic decisions. As we continue to monitor these trends, our goal is to provide valuable insights that help you navigate this complex landscape.
Source: Bullpen Consulting