Investing in New York for Canadians

February 25th, 2020

Owning a property in New York is a dream for all investors around the world, but some are luckier than others. Due to their geographic proximity, their common language and the similarities of their culture, many Canadians come to invest substantial amounts in New York real estate. So much so that in 2019, Canadians bought more goods in New York than any other nationality in the world. How important is the investment real estate market ? Is there a specific procedure for investing when you are Canadian? Only by reading the rest will you have answers…

The importance of Canadians’ real estate investment

The Chinese ? No. Russians ? Also no. Unexpectedly, the biggest foreign investors in real estate in New York over the past decade are our neighbours to the north.

Canadians have indeed contributed $15.5 billion to the city’s commercial real estate market over the past decade. This is almost double the $ 8.8 billion from the second largest, the United Arab Emirates and, third, China ($8.1 billion).

Canada’s $15.37 billion investment is spread across 81 properties; the United Arab Emirates bought 15 and China bought 30. They were followed by Israel, which invested $ 5.26 billion in 59 properties.

Canadians have invested $3.8 billion in the city’s housing market so far in 2018, already almost doubling the total of $1.97 billion from last year, and surpassing the previous high of $2 billion dollars established in 2007.

Who are the biggest investors? Pension funds, such as the Canada Pension Plan Investment Board and the Ontario Municipal Employees Retirement SystemInsurers and asset managers are also big investors in huge projects like Hudson Yards, the largest private real estate development in U.S. history.

Investing in New York for Canadian citizens: how does it work?

Getting a loan in the United States

Getting a mortgage from an American bank is an increasingly popular way for Canadians to buy property in the United States. However, there are key differences between typical U.S. and Canadian mortgage products:

  1. Mortgages in the United States tend to take longer to organize and require more paperwork. US fees are generally higher and a deposit of at least 20% is required.
  2. Furthermore, interest calculation works differently from Canada (monthly instead of semi-annually)
  3. American mortgage products tend to run longer than their counterparts in Canada.

Some banks have specialized in lending to international buyers, but on different terms from those of local residents. The documents required to open a mortgage in the United States can also be quite demanding, due to the different financial regulations.

Getting a loan in Canada

Another option is to get a mortgage in Canada for your American property. You could do this with a cross-border mortgage, offered by some large institutions like BMO or RBC. The advantage of taking this route is to use your local credit history here in Canada to get the best possible terms on a loan.