experts: real estate column Friday, May 16, 2008

The Property Investment of a Lifetime

It's a good time to buy in land in Saskatchewan and Manitoba.

By Ozzie Jurock

While some of our readers may be short-term investors - and flippers - no one should forget that real estate is ideally a play for the very long term. Don't you wish your grandparents had bought a piece of B.C. or Alberta real estate and just held onto it? We should not wait to buy land, we should buy land and wait ... is the old adage.

Well, your grandkids will say the same about you. But instead of B.C. and Alberta, these kids will likely be most happy that you bought land, especially raw, land at cheap prices in Saskatchewan and Manitoba, in 2008.

At the start of this decade it was all about energy and recreation. From now on it will be all about food and water and these two Prairie provinces are where it is at. The price of wheat and other crops from the Prairies are soaring, as the middle class enlarges in Asia and the misguided biofuel industry claims more cropland. This month wheat futures are $9 to $10 per bushel, twice the price of a year ago.

Meanwhile, the United States is in the midst of a drought that has lasted for 10 years. About 31% of the U.S. is experiencing moderate to exceptional drought as of early February and this is the driest spring in the Southeast U.S. since record keeping began in 1895.

Manitoba, though, has 100,000 lakes and 17% of the province is covered in water, and it is right on the U.S. border.

Saskatchewan has the lowest farmland prices in North America, despite recent increases. There are now opportunities to buy farmland in Saskatchewan, as an investor, without ever having to farm yourself.

In Saskatchewan, farmland sells on average for $350-$400 per acre, and rents for around $40 per acre. This compares with Ontario, as one example, where farmland sells for $6,500 per acre and rents for $175-$300 an acre.

There are agencies, such as Regina-based Agriculture Development Corporation (www.farmlandinvestor.ca) that create turnkey investments in Saskatchewan farmland that may generate flow-through tax deductions and rental income, with the potential of capital gains. For example, you can buy 1,000 acres of cultivated cropland near Eyebrow, Saskatchewan for $300,000 (Tim Hammond Realty 306-948-5052), or less than the price of a Burnaby condominium. No guarantees, but this an example of how being a remote farmer/investor could pay off. In Manitoba, there is so much lakefront that the province is expected to hold another cottage lot draw this year, wherein for a $100 deposit, Manitoba residents have a chance to buy waterfront lots for, in some cases, at less than $25,000. See the web page at www.gov.mb.ca/conservation/cottaging/ for updates on the 2008 draw.

Major Point:

Whether it is climate change or the raising of income levels (and wheat demand) in China and India, the outlook is for price pressure on areas that have water and farmland. Both are in abundance in Saskatchewan and Manitoba, with real estate prices probably the lowest you will see in your lifetime. Surprisingly, while Alberta has a lot of farmland and some of it quite excellent ... there is a lot of water shortage here. So if water is your bent ... Manitoba and Saskatchewan are the better bets.

Published in the Vancouver Sun, March 27, 2008




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