The drop in global oil demand and subsequent economic shakeout continue to shake up Alberta’s real estate economy. With home prices down, Calgary—along with the rest of the province—is turning into a renter’s market. Even in the luxury residential market, Calgary home rental rates are 20% below the levels of one year ago. In Calgary where dependence on the oil market is a powerful economic force, this latest downturn has left office spaces and homes vacant, and leasing agents struggling to appeal to tenants. While those at the lowest income levels may still not find affordable housing, the new economic shift has provided an opportunity for those with moderate amounts of money to spend on rent. Landlords have lowered rents and are offering extra incentives to encourage new residents to sign affordable housing leases.
In business news, the Canadian Federation of Independent Business indicates that its members’ confidence is at the lowest level since March of 2009, with a Business Barometer index of 52.3. British Columbia small businesses are more optimistic, registering an increase in the index to 62.5. In contrast, Alberta business owners’ confidence is at a low 26.5. The March 2016 report indicates that the biggest challenge facing Alberta businesses is a lack of domestic demand. This comes as little surprise. The Alberta government points out that every downturn in Alberta since 1980 has been triggered by a drop in oil prices.
Opportunity is Knocking
But all is not doom. The combination of an excess supply of office space and luxury homes in Calgary is an open opportunity for investors and growing businesses alike. With lowered rates and ample space, new businesses should take advantage of this downturn to settle in for the long term. The availability of affordable housing means that growing companies can expect a steady supply of employees to fuel their expansion. The latest economic reports indicate that Canada’s economy has started to rebound with double the expected growth for January. Economists had originally predicted just 0.3% growth after a mere 0.2% showing in December of 2015. Based on the new 0.6% figure, Bank of Canada is predicting economic growth for the year at 1.4%.
As Canada rebounds, Alberta can expect to rebound as well. A shift in businesses and workers to the region will result in the increased consumer demand that businesses need to soon experience greater levels of optimism. In fact, Calgary is already buzzing with public and private sector projects. The low Canadian dollar has boosted demand for exports, encouraging Canadian manufacturers to invest in production capacity. In a recent interview, Finance Minister Bill Morneau said that he believes “we’re starting to see the green shoots” from those investments.
Timing is Everything
With its rich resources and strong infrastructure, it is only a matter of when, not if, Calgary real estate will recover from this latest economic dip. There can be no doubt that, whether investing in commercial or residential properties, the opportunity to buy low and sell high is here now. During this time of transition, our team has the skills and experience to assist you in finding the best location for your staff or managing your residential assets. With our knowledge and expertise, you will be well positioned to join Calgary’s coming economic rise.