Posted in the Financial Post
Katia Dmitrieva, Bloomberg News | June 24, 2015 | Last Updated: Jun 26 8:38 AM ET
David Cynamon knows how to unwind on summer weekends. The entrepreneur steps off a chartered float plane onto a wooden dock and is greeted by his staff as he passes a custom-made tiki bar and bubbling jacuzzi on his 10-acre estate.
A cheap Canadian dollar is bringing new buyers to recreation hot spots like Whistler, Tofino and Ontario’s Muskoka. Read on
His “cottage,” with nine bedrooms, tennis court and all-terrain vehicle to cross it all, isn’t in the Hamptons or St. Tropez. It’s hidden among 100-year-old pine trees a few feet from Lake Joseph on the rugged gray rock of the Canadian Shield. It’s also likely doubled in value since he bought it about a decade ago.
That’s one reason the Muskoka Region — just Muskoka to the initiated — is the world’s second-fastest growing recreational real estate market after Cote d’Azur, France, according to Christie’s International Real Estate. The Canadian sanctuary, once given away for free by the government and now a treasured spot for the titans of business, is attracting American investors who want a rustic retreat that comes with 800-thread-count sheets.
“When I boat, I see what’s going up and it’s pretty impressive,” said Cynamon, a former co-owner of the Toronto Argonauts Canadian Football League team and founder of KIK Custom Products, one of North America’s largest independent manufacturers of consumer packaged goods. “I don’t even think you can get on Lake Jo anymore for a million dollars, unless you’re literally in a tent.”
Lake Joseph, Rosseau and Muskoka are the three major lakes among the hundreds that make up the Muskoka Region. A hunting ground in the 1700s for trappers working for the Hudson’s Bay Co., Canada’s oldest retailer, the land is now dotted with forested estates like Cynamon’s, many only visible from a plane or boat. Here, 200 kilometres north of Toronto, Canada’s largest city, cottaging is a verb and all estates are called cottages — no matter the size.
The cool waters mask a hot housing market only matched by Toronto, where prices for a detached property reached a record $1.1 million on average in May. Last year was also a big one for Muskoka, where sales of properties priced at more than $2 million jumped 69 per cent to 59 transactions, according to a Christie’s report.
This month, a Muskoka cottage was listed for $25 million. If the 18-bedroom estate with eight fireplaces goes for that price, it would be a record. The 19-acre property is located at the north end of Lake Joseph, referred to as Billionaire’s Row.
Cynamon got a taste for the market when he considered buying another cottage, a 10-minute ride across the lake on one of his boats, for $7 million. He decided not to close on the property and it sold to another buyer last year for more than $12 million.
Part of what’s driving up prices is foreign interest. The Canadian dollar has dropped 12 per cent in the last year against the greenback. Despite Muskoka properties hitting record prices, it’s still a cheaper option than Southampton, East Hampton and other towns on the south shore of Long Island, New York.
In Muskoka, a four-bedroom cottage on a few acres with a boathouse on one of the main lakes can be had for less than $2 million. A house in the Hamptons sold for $147 million last year, shattering U.S. records, while a home a mile from the beach can be listed for as much as $21 million.
“The Asian, European, and American market has definitely taken notice of the Muskoka area — they haven’t really been around that market and now they see value as an investment,” said Badger Storey, an agent at Sotheby’s International Realty Canada in Port Carling, Ontario, who grew up spending summers at his family’s cottage on Lake Joseph.
Float plane Charters
“People want to get into the wild north of Canada, into the woods and the rocks and the lakes,” he said. “It’s what’s attracting people. But it’s also a tame area — you don’t break a nail very quickly.”
A total of 921 planes landed at Muskoka Airport from January to April, up 4.5 per cent from the same period of 2014, according to data collected by the airport. Last year, about 363 planes landed from the U.S., the most since the 2008 financial crisis.
Cottagers also arrive directly to their dock via chartered float plane from Toronto’s island airport, bypassing the congested Highway 400 that can suck up three hours by car. Cameron Air, the service that dropped Cynamon and his family off in 45 minutes, flies nonstop starting Fridays at 5 p.m. The private flights, which cost as much as $3,000 round trip, are how dealmakers on Bay Street, Canada’s financial district, begin their cottage weekend.
Personal Water slide
Bobby Genovese takes his own plane. Genovese, who’s cottaged in the area since the 1960s, travels from the U.S. to the Muskoka airport on his Learjet 55 on the first long weekend in May to prepare his properties for summer, joined by his 14 staff. Cottage season starts in earnest after the July 1 Canada Day holiday.
The founder of Barbados-based BG Capital Group, which has assets of about $200 million including stakes in cottage builder Tamarack North Ltd., has five properties worth $35 million, all for personal use.
His cottage, on a mile of Lake Rosseau shoreline, has a 50-foot high waterfall, rock-climbing wall, and water slide blasted into the rock face. At night, he and his wife typically host a dozen guests on their patio at the water’s edge, warmed by the outdoor gas fireplace, bottles of red wine, and steak cooked by the private chef.
“When I was growing up I couldn’t even fathom a million-dollar cottage,” said Genovese, who’s selling one of his properties for $1.3 million, an island he bought to park a historic boat that didn’t fit in his boathouse.
The investor estimates about half the region’s homeowners are Canadian, with more than a quarter from the U.S. and the rest from Asia and Europe, a big change from a century ago when the makeup was almost exclusively local.
Muskoka land, bought by the Canadian government from Aboriginals and then given to settlers for free to encourage logging and farming, started to become attractive for vacationing in the early 1900s. Americans traveled by boat and rail, and prominent Canadian and U.S. business families, seeking the “Muskoka cure” built their sprawling estates away from the city’s summer heat and smog for a few weeks of relaxation.
No matter how modern or vast, cottages here have classic Muskoka elements: Cynamon has a Muskoka room — a sun room for dining that faces the lake — and low-slung high-backed wooden Muskoka chairs on the dock. His modern touches include white wood floors and white walls in lieu of the traditional all-pine interior and speakers throughout the property playing everything from pop to reggae.
Cottaging is now a tradition in Ontario, Canada’s largest province. Hollywood celebrities Goldie Hawn and Kurt Russell; singer and Ontario native Justin Bieber; model Cindy Crawford; the Rogers family, which owns Rogers Communications Inc.; Robert Deluce, chief executive officer of Porter Airlines Inc.; and Magna International Inc. CEO Don Walker can be spotted around the lakes.
Cynamon’s guests wake up in the morning looking out at the sunrise from beneath duvets in the boathouse’s guest room above the lake.
“We’re all about the water: everybody’s got a boathouse, everybody faces the water, it’s all about the view, it’s all about how big your dock is,” said Cynamon, who had just returned from a hiking trip to Washington’s Mount Rainier. “Everything relates to the water. That’s what’s unique here.”