By Ozzie Jurock
A historic time for Western Canada? 2012 may well be known as the cementing of Alberta's economic recovery as it shrugs off a dull past few years. It will mark Saskatchewan's growth and expansion of its natural and farmland resources and it will mark B.C.'s growing pre-eminence in Canada as we see financial – even economic – power slowly but surely moving east to west.
This long-term economic revival will benefit all Western Canadian real estate markets, both residentially and commercially. Western Canada is at a historic point; the old dynamics – resource crash and high mortgage rates – don't apply. Low mortgage rates, a sharp up-tick in international migration (notwithstanding a downturn in inter-provincial migration till 2015), low unemployment and a recovery in virtually every resource sector.
The fact is, Western Canada is a major source for what the world, especially oil/gas/coal/power-hungry China, needs. China, in fact, represents the biggest economic sea change in modern history, similar to the industrial revolution of the 1800s or the rebuilding of Europe 50 years ago. This global power shift will transform the world and, for the next decade, resource-rich Western Canada will see major benefits.
Wars in the Middle East, uncertainty of oil supplies, unfriendly dictators in South America will all combine to see much more interest by the U.S. to see continued expansion of Alberta's tar sands. Canada is already the U.S.A.'s largest supplier of oil. It is safe, predictable and "friendly." Massive investments in the oil sands are underway now. Add to this it is estimated that B.C. and Alberta have found extraordinary quantities of shale gas to meet domestic needs for 200 years! Asia also eyes the oil and gas – and China itself has invested more than $10 billion in the oil sands.
According to the Major Project Inventory compiled by the B.C. Ministry of Jobs, Tourism and Innovation, the combined capital costs of major projects under construction in the province in the fourth quarter of 2011 jumped nine per cent to $73.5 billion from the third quarter, and was 19 per cent above fourth quarter 2010.
However, Vancouver also is growing in stature as a financial centre, ranked ahead of Dubai, Amsterdam, and Montreal. Its Chinese government-approved destination status brought 60,000 or more visitors from Mainland China last year (some buying real estate on the drive-by) and there are a lot of other reasons:
In my view, there is a power shift underway – east to west. The West does not rely as much as Ontario or the U.S. through manufacturing, but rather will expand strongly in the natural resource sector. There will be more expansion towards Asia – Canada wide. The Keystone project delays means that the Canadian government is waking up – it needs different takers for its oil than only the U.S. and it is looking to Asia, which means west.
Vancouver, hemmed in by ocean and mountains, will keep its real estate smiling. You can do business by phone in Europe and in Asia on the same day. It will also become the centre of the (Canadian) world to do business – the true gateway to the east, driven by it's large third and fourth generation Asian population. Money will keep flowing in – and for once, the money is not just coming for the vistas.
What about real estate? Maybe the year of 2012 may be a year of re-adjustment, where a slight overbuilding cools the overall market. But note: Vancouver now has two real estate markets, one driven by general market conditions (buyer fatigue, financing harder and harder to come by, rising inventory, dropping sales), which are down. The other (single family homes on West side, pre-sale condos) driven by overseas speculation and inward migration investment is still, well, hot. And that will continue.
Finally remember, house hunting is a little like duck hunting. When duck hunting one has to lead the duck. You have to shoot ahead to allow for the distance the duck is going to fly while your shotgun pellets are getting to him. If you don't you'll always be shooting where the duck was, not where the duck is.
Same thing with the real estate market. It is always changing. And where is the duck flying high for a long time to come? Western Canada!
Published in Westcoast Homes & Design Magazine, May 21, 2012
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