From The CAIC : Impending condo takeover? There is a bright side.

Investor-owned condos are surging, particularly in the GTA. And with rents getting higher, how can apartment owners compete with what condos offer—including inexpensive mortgages? 
Whether or not the situation is a threat, it’s certainly on the industry’s radar. “Most of us believe that the condo and apartment market is imbalanced,” says Trish MacPherson, Vice President, Sales and Marketing for CAPREIT. 
 
A rise in interest rates, she says, could tip the balance. It would reduce the number of condo investors and, with housing are no longer appreciating, investors would look for more yield. “That’s when we think condo owners could become more aggressive on rents,” she says. “When that happens, we’ll have a rental issue on our hands.”
 
Yet there is always a silver lining. MacPherson believes apartment landlords are competitively positioned, with better cost per square foot, compared to condo owners.  They also have location on their side. “It’s not always the case, but the older rental stock tends to have been built in prime locations,” she says, whereas “condos aren’t always on subway or metro routes.” 
 
Another positive? The condo surge is making neighbourhoods slightly more upscale. “That will work to an apartment owner’s advantage if we’re willing to put some capital into our buildings,” Macpherson says. 
As for bringing older buildings up to par, she believes capital investments are proving wise: “Common area improvements are not only effective now but a defensive measure for the future.” She adds that customer service, too, is key. Apartment owners are following condo owners’ lead with technology-focused customer service, such as intranet sites. 
 
These measures may be the best defense against a potential condo takeover. “It’s having a good product at the right price and the right location… good customer service and sales techniques,” MacPherson says. “It’s back to basics.”
 

on October 15, 2012