Toronto condo market’s cornerstone
When choosing the right name for a company, large corporations might spend tens of thousands of dollars on consultants and research. It might take months of time, filled with dozens of focus groups, until a committee agrees they’ve crafted the perfect moniker for their business.
But in Johnson Cheng’s case, all it took was a few drinks with his business partner, Shab Rajabzadeh.
“We were sitting around, having a few beers, and talking about what we wanted our business to be. We knew we wanted to focus on what differentiated us from other firms. We knew we wanted to be part of the very foundation of a project and not just sell, but help our clients develop the project,” explains Cheng.
“When you build a home, you would set the one stone from which you made the measurements for the rest. When we said ‘Cornerstone’ should be the name, it just made sense.”
Formed in 2013, Cornerstone Marketing offers consultancy services to developers. While the company takes on big projects (including The Eglinton development at Yonge and Eglinton), Cheng says keeping the firm’s thinking nimble is a critical component to their success.
“When you’re a big company in a competitive market, you can afford to be not as innovative. I knew if I was going to start my own business, we needed to think outside of the box,” Cheng says. “What we do is we try to make sure that we look at what it is that a lot of people want. What are the investors looking for?”
While Cheng and Rajabzadeh have proven adept at meeting the needs of the market at large, Cheng’s background lends itself particularly well to meeting the needs of one group of real estate investors.
Raised in Vancouver, Cheng worked for developers in Hong Kong after graduating from Queens University and then moved to Toronto after the economic downturn of 2008.
Multilingual, Cheng’s fluency not only in Mandarin and Cantonese but also Chinese investment culture has been a huge boon to working with such a significant part of Toronto’s population.
“The Chinese community of condo buyers is very important in the Toronto market. I’ve gone back and forth between Hong Kong and Toronto for years and I understand the mindset. In our company one owner is Chinese, the other is Iranian. We’re all immigrants, we understand the challenge of surviving and integrating into Toronto.”
Cheng says some of the ways to meet the needs of Chinese condo buyers is through simple marketing moves, like providing materials in multiple languages. Others include educating developers on small cultural differences. People travelling in North America may notice when getting on some elevators there is no 13th floor. For Chinese investors, unlucky connotations may be attached to a different numeral.
“We realized that for the Asian market, that some of the ‘four’ numbers may not be so auspicious. So we skip those numbers when numbering a building. In some cases there might not be a 4th floor or 14th floor. Little moves like that, just to be a little more culturally sensitive, can have an impact.”
Cheng says there’s no doubt about the impact the GTA’s Chinese community is having on the real estate market. While the relevant numbers from the 2016 census aren’t due out until this fall, 2011 census results indicate the number of people identifying as Chinese in the GTA is closing in on 600,000. That number includes recent immigrants, and second- or even third-generation Canadians who still have strong ties to China in the form of parents and grandparents.
Cheng says understanding the dynamics of this group of investors is key to developing projects that appeal to them.
“What you find in China is you don’t really get single detached homes, especially in big cities. Coming here, the idea of owning your own piece of land that you can build on and is yours for eternity is amazing,” Cheng says.
“But now, what’s happening is single detached home prices have gone up substantially. So they might buy a home, but they’re very savvy investors … a lot of people say, ‘Instead of buying one single detached home for $1 million, I could buy (several) condos. And then, unlike a home where I’d have to sell the whole thing, I can just sell one condo at any time.’ They like having the flexibility.”
A place to stay
Cheng says condominium developments are attractive to Chinese buyers for a number of reasons. Aside from familiarity with high-rise living in large cities like Beijing or Hong Kong, condos are low maintenance — a definite plus if you’re a frequent traveller. A condo may also be an attractive option for a family sending a student to study in Canada. But developers need to consider that a simple, one-bedroom studio isn’t necessarily going to cut it for this market.
“Many buyers aren’t just looking at an investment, but also the potential to use it for themselves. They want something with maybe one bedroom and a den, or two bedrooms. Canada offers opportunities for extended travel visas for parents and grandparents who might not just visit for a month or two, but up to two years. Some people say ‘I’ll buy, then, if I want to come and visit, I have a place to stay.'”
In fact, Cheng says the changing landscape of Canadian immigration policy has diversified the pool of real estate buyers. With a greater focus on bringing skilled workers to Canada, developers are seeing demand for condos that aren’t just an investment vehicle but rather, a home.
“Canada is saying, ‘If you like what you see, stay. Apply for permanent resident status, and eventually citizenship.’ People are looking at the global world and asking, ‘Where should our kids be settling down and creating a family?’ Toronto is an attractive option. It’s a very livable city.”