Jan. 31 (Bloomberg) -- Trump International Hotel & Tower Toronto, Canada’s tallest residential building, opens today, capping a seven-year effort to bring the brand of billionaire Donald Trump to the country’s largest city.
The C$500 million ($498 million) Trump tower is the first of three luxury hotel-condominium projects opening this year in Toronto, after The Ritz-Carlton opened last year. The Four Seasons Hotel and Private Residences and the 66-story Shangri-La Toronto are also set to open this year.
Toronto’s rise of luxury hotel residences follows a record year for tourism, with more than 9 million hotel-room nights sold in 2011, according to Tourism Toronto. The industry association said the availability of luxury hotel options attracts “high-value visitors” to the city.
About 60 percent of the 118 residential units in the 65-story tower have been sold, with the remaining condos priced from C$2.3 million to C$6.3 million, according to Talon International Development Inc., the owner and developer.
The building also has hotel suites, owned by investors who can earn revenue when used by a hotel guest. About 85 percent of the 261 hotel rooms have been sold, with the rest priced from C$967,000.
“In this market, and at the prices I know those units have commanded, that’s a pretty healthy ratio,” John Andrew, a real-estate professor at Queen’s University in Kingston, Ontario, said in a telephone interview.
An international investor bought a penthouse at Toronto’s Four Seasons for C$28 million, which the developer said last year was the most expensive condo ever sold in Canada.
Talon, based in Toronto, bought the property at Bay and Adelaide streets in the financial district in 2004 and proposed a luxury tower with the Trump name. The Trump Hotel Collection has a management agreement to operate the hotel, which was originally slated to open in 2009. Design changes delayed the project, Talon said.
The closely held developer arranged C$310 million in construction financing from Raiffeisen Zentralbank Oesterreich AG, an Austrian bank, in 2007 and started construction with C$250 million in sales.
Buyers have come from around the world, with Canadians representing a “considerable portion,” Talon Chief Executive Officer Val Levitan said in an e-mail. That portion is growing as the project nears completion, he said.
“Early on, the bulk of purchasers were investors,” Levitan said. “Over the past couple of years that mix has shifted much more towards people who are looking to use their suites as their primary home, a downtown pied-a-terre or even as a corporate suite.”
Investors of Toronto’s luxury units are taking a gamble on a limited market of wealthy visitors and dwindling prospects as companies cut back on corporate travel, according to Andrew, director of the Queen’s Real Estate Roundtable.
“I’m very skeptical that there is sufficient market to support all of these hotels,” Andrew said in an interview. “There are not enough wealthy individuals running around that are going to keep those hotels in business.”
Toronto will have about 1,000 luxury rooms after the Four Seasons and Shangri-La open, estimates Trump’s general manager Mickael Damelincourt.
“Compared to what Chicago, Los Angeles, Miami, Paris, London has to offer in terms of luxury hotels, it’s nothing,” Damelincourt said. “There is definitely a demand.”
Trump Hotel Collection also oversees five U.S. hotels including two in New York and one in Chicago, and a hotel in Panama.
Nobody Can Compete
If there is rivalry brewing among Toronto’s luxury hotels, the billionaire behind the brand name said he isn’t worried.
“Toronto is a vibrant, great city. We have a great product,” Donald Trump told reporters Jan. 24 at the Americas Lodging Investment Summit in Los Angeles. “Nobody will be able to compete with us.”
The Trump building is in the heart of Toronto’s financial district, rising 277 meters (908 feet) among towers bearing the logos of Canada’s largest banks including Bank of Montreal and Bank of Nova Scotia.
The Trump hotel features a two-level spa with pool, a 12,000-square-foot ballroom and 31st-floor dining at Stock Restaurant Bar & Lounge. Rooms start at C$395 a night and go as high as C$20,000 for the 4,000-square-foot presidential suite.
“Collectively, these luxury properties help elevate Toronto to a level of being one of the elite cities in the world,” Alex Shnaider, chairman of Talon, said in an e-mail. “It will benefit the city as a whole -- making a great city even better.”
The hotel-condo idea remains “an unproven concept” for Canada, with uncertain investment returns, said Yossi Kaplan, a Toronto realtor with Your Choice Realty whose clients own units in the building. Trump’s name resonates more with foreign investors than Canadians, he said, and most calls he gets on the project are from outside the country or recent immigrants.
Trump’s name was a draw for Toronto’s John Hutson, who bought a 17th-floor hotel suite as an investment and a 48th-floor two-bedroom condo to live in.
“You associate Trump with special projects that have wow factors,” said Hutson, 50, a tax partner at Deloitte & Touche LLP whose office is a five-minute walk away. “The key is buying the best. And from a quality and location perspective, for my money, it’s Trump.”
To contact the reporter on this story: Doug Alexander in Toronto at firstname.lastname@example.org