Philip Soper, president and CEO of Canadian real estate brokerage firm Royal LePage and Brookfield Real Estate Services, sees luxury markets popping up all over Canada—from the big cities to the much smaller towns.
His company most recently authored a report detailing how the condo market is booming in Canada.
Based in Toronto, Mr. Soper, 58, was an executive at IBM before moving into the real estate business.
Mansion Global caught up with Mr. Soper to discuss which Canadian cities offer the best return on investment, the two biggest political issues facing the luxury market and more.
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Mansion Global: Describe your dream property.
Philip Soper: My mind drifts to recreational properties. A perch on the mountainside in Alberta or British Columbia would be great. Or, more realistically, if my wife was coming along, too, which I’d assume she would be, it would be a house on the water. I’d choose the south shore of Nova Scotia—Chester and Lunenburg are absolutely beautiful.
MG: Do you have a real estate property that got away?
PS: When I was younger, I had an opportunity to buy a piece of land on the Queen Charlotte Islands, a group of islands off Vancouver. It would have been a stretch. It wasn’t that expensive, but it seemed extravagant. Now I realize it would have yielded amazing financial rewards, but also the experience would have been amazing.
MG: What does luxury mean to you?
PS: The answer is different for everyone. For me, it’s space. I live in a more than 100-year-old house that’s wonderfully crowded when everyone’s home. I live in one of the most expensive cities in the world, so space is difficult.
What I see in the condo market is most of the luxury product coming in at less than 2,000 square feet. And for baby boomers who are finally moving into condos from the suburbs, it’s a big challenge. Space, in our big cities, is the ultimate definition of luxury.
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MG: What area do you think is the next hub for luxury properties?
PS: As baby boomers retire, secondary markets, like Lincoln, Nebraska, and Regina, Saskatchewan, offer opportunities.
Even in places like Burlington or Oakville, Canadian cities which have been the epitome of suburban sprawl, are suddenly seeing a market for luxury condominiums.
In the big cities, the prices of a luxury condo is very similar to the price of a large suburban home. People haven’t be able to sell their suburban homes, buy smaller condos and keep the extra money, because our condos are just so expensive.
MG: What’s the biggest surprise in the luxury real estate market now?
PS: It’s the realization that the luxury market is driven more by organic demand than foreign investment. There’ve been moves in Canada, Australia and China to tax foreign investment in real estate. And moves, particularly in China, to restrict the exiting of capital. Even taking wealthy Chinese buyers out of play, our luxury markets are still very strong.
We’ve done studies that show foreign investment, even in our city centers, is less than 5% of market. It’s wealth generated in North America that’s causing prices to increase.
MG: Where are the best luxury homes in the world and why?
PS: The biggest opportunity for purchasing luxury property in a world-class city is likely Montreal. Quebec, our second largest province, and Montreal, our second largest city, went through political upheaval a generation ago that really damaged the economy. Now we’re looking at an economy that’s the strongest in 40 years. The building of luxury properties is booming, but prices are half of what you’d pay in Toronto and one-third of Vancouver and a fraction of what you’d pay in San Francisco. It’s European feel, with the language and the food.
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MG: What’s your favorite part of your home?
PS: There’s a man cave in the basement—my kids still invade it, but it is a nice place to go. It feels comfortable. I’m a guitarist and singer in a country band. I have my friends down there, we jam.
As a businessman, I appreciate the relationship of supply and demand. And there are a million rock ‘n’ roll bands in Toronto, but not a lot of country bands.
My second favorite spot is outside. I live in a neighborhood called Lawrence Park, and the trees are large and gorgeous. I can sit in my backyard, look at the trees and forget all about the insanity that is Toronto traffic.
MG: What best describes the theme to your home and why?
PS: With four children, it’s family first—comfort and utility. But it is a grand old century home, as we call them here. It would have been torn down if it didn’t have charm; it has high ceilings and beautiful woodwork. It’s been modernized just enough to be comfortable.
MG: What’s the most valuable thing in your home?
PS: My grandfather was an actual Arctic explorer. When he retired he became a painter, and he painted the Arctic. I have some paintings of his, and those would probably be the most valuable.
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MG: What’s the most valuable amenity to have in a home right now?
PS: I’m a tech guy. I spent 15 years at IBM before Royal LePage. So for me, it’s connectivity, a smart home.
MG: What’s your best piece of real estate advice?
PS: Take risks. It’s good life lesson overall. Humans are inherently risk-averse. Cautious behavior is built into our DNA, but for the most part taking risks pays off, both in real estate and in life.
MG: What’s going on in the news that will have the biggest impact on the luxury real estate market?
PS: The two things I worry about the most are the war on trade and immigration. The free movement of goods and services in the world has created incredible prosperity. And it’s a fool’s errand to attempt to cut off countries. It’ll move the clock back, and hurt the luxury market.
Immigration is necessary to keep our standard of living. We don’t have enough babies to replace our population. A country like Japan will lose 11% of its popular by 2025, which means fewer people burdening higher costs.
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MG: What is the best area now for investing in luxury properties?
PS: In Canada, I point to Calgary or Montreal, again. Those are booming economies with cities that are undervalued. Calgary saw lowered prices because of the 2014 collapse in oil prices. They’ve come out of the recession, but they’re still a deal.
Montreal is a great options because of all the things I said before.
MG: What area currently has the best resale value?
PS: It would be Atlantic Canada—specifically Nova Scotia, New Brunswick and Prince Edward Island. Also, Quebec and Alberta provinces. In terms of big cities, Calgary and Montreal stand out for me.