...it's also one of the most desirable places in Canada to do business.
We don't invest in Calgary because we live here. We invest because the economic fundamentals support our investments.
"In ancient Persia, a wealthy farmer leaves his home to seek even greater wealth, and spends his life in a fruitless search for a perhaps mythical diamond mine. Finally, as age and years of frustration take their toll, he throws himself into the sea and dies, an unhappy pauper far from home. Meanwhile, back at his estate, the new owner, surveying his vast acreage, sees something in a stream, something bright, glistening in the sunlight. It is a large diamond, and turns out to rest atop the fabulous Golconda mine."
When Mark and I first started to look at real estate investing as a wealth building tool we were presented with investment "GEMS". Places where values were increasing above other areas of Alberta, Canada or the US. Areas that enjoyed exceptional cashflow or that investors were buying up or were great recreational properties sure to increase in value. It always came back to this story. Why would we invest anywhere else when we could find diamonds in our backyard. On top of this, we enjoy and are great at finding, fixing and managing properties. This is a great strength that would be wasted if we decided to invest outside of our expertise. The diamonds are here and we know where to look for them. They exist in Calgary and this is why...
Presently, like many places in the world, Calgary is experiencing a downturn. The impact isn't really being felt as many companies are hiring, playing catch-up from the years when we just couldn't find enough people to fill all of the jobs created.
The downturn has created a buyers market. Gone are the days when people lined up to get a wrist band to buy a condo. For the real estate investor we now have more affordable pricing for properties and easier cash flow. Thank you!
Calgary is still enjoying a low vacancy rate for quality rentals. We had a vacancy recently and filled it within a day - and this was at an above average rent.
Even with 2007-2008 skyrocketing property values, Calgary still remains one of the most affordable places to live in Canada (when based on average incomes). For the last 7 years Calgarians enjoyed the highest wages per employee in Canada, and the highest average annual income at $52,922 in 2007 (compared to Edmonton at $42,863, Toronto at $37,018 and Vancouver at $34,941).
The city is also home to the largest number of millionaires in Canada on a per capita basis (182.6 per 100,000 in 2005). Calgary has also experienced the highest growth in millionaires in Canada, more than quadrupling from 1996-2005.
Transportation and Lifestyle
Calgary is located at the crossroads of two of North America's major highway systems: the Trans Canada Highway and the CanaMex Corridor. The TransCanada extends from the Atlantic to the Pacific. The CanaMex from from northern Canada all the way to Mexico.
This has helped Calgary to become a hub for the oil and gas industry and a major player in the manufacturing, transportation, finance and tourism industries.
It has been known as the Head Office of the West for many years. Only Toronto hosts more major company head offices. Calgary boast of 17 of the top 20 revenue generating companies in Alberta.
Lifestyle plays an important role in the in-migration of both companies and their employees. Calgary enjoys easy access to the Rocky Mountains and the Southeast BC playgrounds.
A Young Population
Calgary has one of the youngest populations in a major centre in Canada. As other areas age Calgary continues to attract a younger population. This gives Calgary a distinct advantage over other populations.
A Diversified Economy
Calgary has diversified its economy in the last few years. The services sector has been led by professional, scientific and technical services, followed by educational services, health care and social services. Energy, transportation and warehousing, information and communication technology, and manufacturing have also become backbones for the Calgary economy. Manufacturing has grown faster than anywhere in Canada and this growth is forecasted to continue.
Over half of Alberta's fastest growing companies are in Information Technology and Calgary is home to the largest number of technology startups per capita in Canada. 80 of the countries Top 100 Employers have head offices in Calgary.
Growth should decline towards the end of 2009 mainly due to a labour shortage, yet Calgary is forecasted to be the location of over one third of new Alberta jobs. Alberta is forecasted to require approximately 90,000 new jobs by 2009 and 158,000 in the next 10 years - the highest of any economic region in Canada. This growth will provide real estate investors with continued low vacancy and a better ROI when they are ready to sell properties or refinance.
The Calgary ring road expansion continues with may sectors nearing completion in 2009. It has long been known that when transportation improves in an area, land values go up. You will usually see homes go up pretty quickly in these transportation corridors as developers take advantage of the improved access.
The Calgary International Airport continues to grow and enjoys 24/7 air cargo service to Asia and Europe, an absolute boon for long term participation in world markets. The $407 million expansion is slated to be completed in 2013.
When you combine the economic fundamentals and a more realistic housing market with a burgeoning provincial economy, you will see why Calgary is sitting as one of the top places in North America for property investors.
The current market turmoil is a repeat of what we witnessed when the Kyoto Accord was announced a few years ago. The headlines also match that time.
Calgary investors who invest based on cash flow and with a long term view, are well positioned to prosper even in this latest world financial turmoil.
The Alberta Advantage
Even with new world economics, Alberta is still the number one place in Canada or even the world to invest. Low unemployment, an abundance of jobs, a diversified economy and improved infrastructure make this debt-free province a real estate gem.
We have one of the most competitive tax environments in Canada. Alberta boasts no retail tax, no provincial capital or payroll tax and the lowest personal tax rate in the country.
A Strong Long Term View
Although Alberta no longer enjoys huge surpluses, funds were put away in the recent boom that will help us through the next few years, unlike many places in the world.
Alberta enjoys a $14 billion Heritage Savings Trust Fund. Created about 32 years ago, the Fund is invested in a variety of assets, including stocks, bonds and real estate. Income is transferred to the governmentÕs operating fund and helps to pay for health care, education, infrastructure and other programs and services.
The "Klein" years saw the debt paid off, high oil prices, and government surpluses led to the creation of the Sustainability Fund. This $7 billion fund helps protect the governmentÕs program and infrastructure spending plans from unexpected drops in revenue and the costs of emergencies, disasters. It has also been used for natural gas rebates and First Nations settlements.
In spite of recent adjustments and a slow-down in activity, Alberta real estate is forecasted to remain exceptionally strong. The real GDP growth is forecast to be 3.0% in 2009, 3.1% in 2010 and 3.8% in 2011. Over 160,000 new jobs are forecasted to be created by 2011 and low unemployment is expected to lead the nation.
Although slower inter-provincial migration is forecasted, higher international immigration is expected to offset the labour shortage
Alberta's economic fundamentals point to a continued Alberta Advantage for investors who focus on the long-term fundamentals both in the world and in Alberta. *Source: Real Estate Investment Network, TOP Ten Towns in Alberta |
