InFocus: Real Estate Investing

Luxury and service – the evolution of investment

Luxury and service – the evolution of investment

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Last week’s federal budget announcement offered a very small carrot for those looking to avoid taxes on real estate investment gains – but financial planners helping clients connect with investments in real estate are offering a couple of carrots of their own.

The April 21 budget will allow Canadians to donate proceeds from their real estate and be exempt from some capital gains tax charged on investment property – but the catch is that you have to sell your real estate to an “arm’s length party” (not a relation) and then donate the proceeds within 30 days.

The budget announcement does not specifically address those who have had large gains on their initial investments, especially for those who are in the luxury market.

That reality is an opportunity for advisors to step up their game in service of clients looking to protect increasingly high returns, while at the same time limiting exposure liabilities, including tax exposure.

For so many of those investors the luxury market has taken on a new prominence, with David Fingold, the president of Forest Hill Real Estate, seeing the Toronto market as a breed apart.

“Toronto defies gravity, especially in the real estate Industry,” Fingold told WP. “The growth in the Greater Toronto Market is unprecedented in size and scope. Toronto residential developers have been building and selling tens of thousands residential units every year for over 15 years.”

It is not unlike New York, where agents at the Corcoran Group now have three categories of luxury: Luxury at $2,300 to $3,300 per square foot; Super Luxury at $3,300 to $5,000 and Ultra Luxury at $5,000 and more.

Canadian investors are just as aware of the potential to access that growth in major cities here through private capital investment. For advisors, looking to service those needs, whether it is through brokering investment in REITs, or other real estate-related opportunities.

The emphasis will increasingly be placed upon creating a one-stop shop in presenting investment partnership opportunities with players providing the same kind of comprehensive platform. Greg Romundt, president of Centurion Asset Management Inc., adovcates that approach, and has made it an integral part of his business model.

“I think they’ve (investors) certainly become a lot more sophisticated. You certainly have a lot more people interested in the business,” says Romundt. “You’ve got full-service models. Ours is a full-service model – for example, we have a developer who comes to us and wants to build an apartment in an area that we are interested in buying. We help them do the construction financing, the mezzanine, provide equity so we can be a joint-venture partner, we can manage it for them – in the end, we might be the guys who buy it from them.”

As an income-producing, diversified REIT owning some 43 residential rental and student housing properties in 16 communities across Canada, Centurion provides investors with the opportunity to invest in a diversified portfolio of such properties, while participating in the profits derived from them.

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Centurion Asset Management Inc. is a Canadian asset management company offering a growing portfolio of real estate investment products.  Centurion Apartment REIT owns and operates multi-unit residential apartments and student housing properties in Canada.  Centurion Real Estate Opportunities Trust is a unique product that provides investors with exposure to a diversified portfolio of mortgages and real estate development.  Centurion has the expertise, infrastructure and resources to deliver end-to-end real estate solutions.  Centurion is opportunistic and innovative, using a value-oriented strategy to make responsible and intelligent investment choices with a goal of delivering monthly income, capital growth and capital preservation.