Edmonton Real Estate Investor: March 2011

I'm so behind blogging it's taken me two weeks to write this. Todd and I had an incredible weekend at the I Can Do It conference in Vancouver.

We had our minds blown and opened by Dr. Wayne Dyer, Caroline Myss, Louise Hays and other outstanding Hay House speakers. The highlight Dr. Dyer shook Todd's hand and gave me a book!

It was well worth it and we came back determined to live our biggest self!

There's a new 6 lane freeway in talks for South Edmonton. I've taken the Anthony Henday and I'm always surprised at how quickly I can circumnavigate the city. Well this proposed route will take things to a whole new level. Anyway the most apparent is Edmonton is really thinking ahead for population growth, increased traffic and commerce.

Strong oil, wheat prices buoy Alberta's economy - "A new survey suggests happy days are here again for Alberta's economy with crude oil and grains poised to be the hottest commodities in the coming year.

According to the report by Barclays Capital, investors are increasingly bullish on both oil and grain, with prices for both viewed as likely to continue to rise amid geopolitical uncertainty and weather challenges around the world.

"The fact of it is agriculture is a good news story today," said Richard Phillips, the head of the Grain Growers of Canada"

Good signs in agriculture are good signs for Alberta. Remember Don Campbell saying "Food, Fuel and Fertilizer will drive the western region"? You've seen potash highs and lows in Saskatchewan, oil prices regain to above $100 a barrel and now food - agriculture begin its accent. The job new job numbers are terrific too.

Totem builds on it's Canadian roots with sixth Edmonton store - "Before the new Edmonton Ellerslie Totem opened its doors for the first time Thursday, company officials and Royal Canadian Legion members raised a big Canadian flag outside the building supplies store.

It was a not-so-subtle reminder to customers that Totem Building Supplies and its corporate owner, Rona Inc., boast Canadian roots — unlike U.S. imports The Home Depot and the under-construction Lowe’s a few blocks north at South Edmonton Common."

I've posted about a few other stores opening up in the Edmonton area. Some come from the U.S.A. or even further abroad from Europe or Asia. But the one constant to note here is that Edmonton is again on the map for growth. Predictably more stable and spread out growth, but growth nonetheless.

TD forecasts banner year for Alberta in 2010 - "Alberta is expected to lead the country in Real GDP growth in 2012 after a strong 2011.

A report by TD Economics, released Wednesday, projects gross domestic product (GDP) growth of 3.2 per cent in Alberta in 2012, but only 3.2 per cent nationally.

For this year, TD Economics predicts 4.2-per-cent economic growth in Alberta, behind Newfoundland and Labrador at 4.7 per cent and Saskatchewan at 4.3 per cent, but ahead of the three-per-cent national forecast."

Oil will probably stay around the high $90's and step above the $100 mark until the political environment stabilizes in the middle east. Profitable oil (for both the U.S. buying and Canada exporting) is around $85 a barrel. Temporarily high priced oil ads gains, but doesn't help in the long term as it is too expensive for importers especially if the CDN dollar is higher. Hovering around the mid $90s for a few months creates a decent cushion for Alberta as long as we can get down a few dollars to the $80s.

Economic spring appears to have bloomed for Alberta - "Over the past six months, more than one-third of the new jobs created in Canada have been in Alberta, which is home to just over 10% of the country's population. This clearly indicates the Wild Rose province is starting to bloom once more following an extended economic winter. Across major industries, manufacturing has, by far accounted for most (+41.7%) of the new jobs added followed by health services (+25.5%), professional and business services (+18%), natural resources (+10.9%) and agriculture (+8.2%). Reflecting this strong pattern of employment growth, Alberta's unemployment rate fell to 5.7% in February, the second lowest in the country and well under the national average of 7.8%."

Tuesday morning CBC Radio announced that Flint Energy was hiring 1000 immediate positions for jobs with skilled and semi-skilled labour. You show up, you get job. Some of the jobs are in Red Deer and others in Sherwood park, just outside of Edmonton in the modular building site. I heard Mary MacGregor, the chief economist of Alberta speak last week. Mrs. MacGregor outlined the growth indicators showing 2013-2019 to have exceptional growth. Being an economist, these numbers were tempered that there are always unexpected events that can damper the best of economies (remember back to 2008?). Needless to say, the real job numbers are solid.

I spent more than a decade living in Japan, very close to the area where the Tsunami hit. This mid-month newsletter will be a brief one and my message simple. Turn off your T.V. and news radio. Donate some money, time or energy to be in positive action in helping the people of Japan.   

It does no one any good to be caught up watching the news and worrying about Japan; simply send a positive vibe and any action you can. The collective consciousness of disaster won't help. We need to be positive and move towards helping and healing.  

I have added a link to charities below that you can donate to followed by the monthly Edmonton updates.

Where Canadians Can Donate For Japan Earthquake,

Pacific Tsunami Aid   Passengers sleep at a lobby as they wait for their transportation at Haneda Airport in Tokyo, March 12, 2011. A devastating tsunami triggered by the biggest earthquake on record in Japan killed at least 1,000 people along the northeastern coast on Friday after a wall of water swept away everything in its path. GO HERE TO DONATE

Take care, be well and help our friends and family abroad.
Todd and Danielle Millar

"Sales have been pretty slow in Edmonton housing market since last spring and although the market wasn’t a hotbed of activity in February, it is showing some life." Read More

For my 2 cents worth.... We will continue to see-saw for the better part of 2011. In Alberta, economically we are very strong, emotionally we are fragile. Once we get through the better part of 2011 and really see the strength of the economy continue momentum, Albertans will become emotionally invested and beginning to buy, spend and invest. 2012 should reflect that and continue upwards barring any major world crisis.

"KMS Tools and Equipment Ltd. is fixing a hole in Edmonton for car buffs, contractors and hardcore home handymen it says was left when the House of Tools chain went under.

The family-owned, Coquitlam, B.C.-based company — whose Edmonton presence has been limited until now to a small distribution outlet — will hold the grand opening of its first Edmonton store next week." Read More

I read this and think - $6,750.00. Why $6,750.00? That is the average rent paid for a 2.5 year garage tenancy, very affordable compared to any other secure storage of the same size. I have been providing safe and affordable service for years to folks that want to restore collector cars.

Many car buffs restore their old beauties over the winter and take them out in the warmer months. In-turn I welcome KMS Tools to town and encourage them to deliver awesome service to the many car buffs of our city.

Alberta Emerging As Safe Haven Among Growing Economic Volatility

"It will morph into something that will not be very kind to financial assets, but may be kind to Alberta. One solution is to take a shot of Novocain, invest in Alberta, and I have a suspicion you will come out ahead. A second approach is to hold real assets or proxies for real assets, such as TIPS (Treasury Inflation-Protected Securities) and inflation-linked bonds. A third way to approach things is to play by the rules as they're written, which demands being cautious, but I don't mean buying bonds. I mean it is incumbent on all of us to maximize complexity in your portfolio, which is the responsiveness of your portfolio to macro-economic outcomes." Vinay Pande, chief investment adviser for global markets research with German-based Deutsche Bank

I think you can spare the Novocain if you are investing directly into real assets (like owning a revenue property) that you control. once again the Provincial, National and Global economies are looking at Alberta as a safe haven. The only risk you have investing in Edmonton is looking to make too fast a buck and not stay the course. When you are prudent and invest into a cash-flowing asset, in an expanding market - you will do well.

Final Anthony Henday Drive Gets Green Light

The massive project — named Anthony Henday Drive Northeast — will be Alberta’s single largest highway construction project to date with 47 bridges, eight interchanges and 27 kilometres of six- and eight-lane divided road that will connect Whitemud Drive East to the Manning Freeway. It’s expected to ease the traffic crush on Yellowhead Trail and, to some degree, the Whitemud.

“I really do believe another period of rapid growth is coming, and it’s coming quicker than you think,” Stelmach said of the province’s continued investment in infrastructure. “It’s no secret that Alberta wasn’t ready for the last one, but we will be ready for the next one. We are moving forward as a province. The world is changing, and Alberta is changing and we’re meeting the demands of the new economic order.”

I second that Mr. Premier, we are on the cusp of another wave of growth. A nice 3-5-7 year cycle I hope. The Anthony Henday has already proven to link up areas of the South East, particularly Millwoods and Ellerslie. And the South West areas have grown, like Terrwilligar, Rutherford and the Hamptons into nice, beautiful communities. Along with the great connectivity, real estate prices have followed and birthed some really scenic areas with upscale shopping and eateries that is still affordable to live. The NE will also experience a price jump in homes and a jump in value by being better connected.

Edmonton could earn more than $6.5 million a year in property taxes, which would help pay off the debt it would incur if it covered one-third of the cost of a downtown arena, city administrators told council Wednesday.

Mayor Stephen Mandel said councillors need to make up their minds to ink or tear up the deal within a month. "It's enough already. I think we're going around too many circles and let's make a decision."

Anthony Hendlay construction (5 year project), Upgrader in Fort Saskatchewan (3-5 year project), Proposed downtown bridge (3 yrs?), Various LRTs and of course don't forget the possibility of a new arena. Even during the recession Edmonton continued with infrastructure but has certainly stepped up the pace now. I think a new arena will vitalize the downtown area, but isn't necessary. Built with private money... I like that idea too.

Here on the South Side there is another interesting project in the works and that is transforming the old Molson brewery into character town-homes with a mix of commercial business and restaurant space. Great idea. I can't wait to see that. Lots of building = strong economy.

Again we are reminded about Alberta's unique, geopolitical ties to the Middle East. Likely the violence and unrest in Libya will be noticed to impact oil prices primarily in the short-term. What is subtler is the long-term shift already underway that positions Alberta as a 'safe oil' country.  

Granted this phrase was coined as a market strategy aimed to take heat off from the environmental bad mouthing that was taking place, but truly Alberta is growing into the 'safe oil' role. And to note many improvements have been put into action to ensure improved environmental responsibility that few other countries would have the ability to honour and act upon so quickly.

Our global trading partners are increasingly keen to watch the alliances Alberta builds, and how those relationships will affect other countries and economies around the world. The latent impact of overseas turmoil will prove itself as adding yet another, stronger layer, to Alberta's stable (key) global foundation.  

Of course our newsletter is about real estate and not buying oil stocks or covering riots across the world. When I look at buying a property, I'm constantly thinking 'what will this city, neighborhood, road be like in the next 5+ years?' Most of the time the impacts will be local; new LRT or an improving demographic. But in Edmonton there are significant global changes that affect our real estate too, and that is why I touch on some of these larger economic drivers, like oil. For example the economic landscape may of course change in Kelowna, B.C. but not quite to the degree that it will in Edmonton, Alberta.

We are fortunate to have another great opportunity here like we did in pre-boom days. Property prices are low, mortgages rates are low, people are moving into the province and there is massive job growth in the works. Political instability abroad, coupled with higher oil prices and large local energy expansions will create higher real estate prices here. You will get greater cashflow and potential appreciation in Edmonton real estate as Alberta plays an increasing role in geopolitics.  

I appreciate all your calls and emails. I'm looking forward to helping you with your next step towards building real wealth.  

Your success continues EVERYDAY, let me help you build for tomorrow.

  "We lose ourselves when we compromise the very ideals that we fight to defend. And honour those ideals by upholding them not when it is easy, but when it is hard." -Barack Obama   Warm

Regards,
  Todd and Danielle Millar 