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Real Estate Investment in Calgary: Siren Song or Phoenix Story

by Heather McDowell on 21 Oct 2022

Changes in the interest rate impact Albertan homeowners and investors, alike.

Investors are faced with a difficult decision; whether to enjoy the security of the sidelines or seize opportunities that the benchwarmers are too risk-averse to embrace. With shrewdness comes the wisdom to be agile.

No Vaccine for Post COVID-19 Trends

Although the Calgary market right now is experiencing the benefits and triumphs impacting the rest of the nation and many of the U.S. real estate markets, there are other factors unique to Calgary that are noteworthy.

The province has been historically criticized for being a petrostate- too dependent, both in terms of economic and employment resources, on the oil and gas industry, leading to perceived instability. This feedback hasn’t fallen on deaf ears- recently the Alberta government has taken steps to reduce their reliance on almost exclusively natural resources revenue to balance the provincial budget.

The Centre City of Calgary can serve as a microcosm for the greater economic landscape of Stampede City. This downtown core was once teaming with oil and gas producers’ headquarters.

Surging Vacancy and Impending Tumbleweeds

A trend that began in 2018, saw many of those companies move their headquarters down to our neighbours to the south. Relocating head offices from Calgary to the United States was an unexpected by-product of this century’s great migration of employees from an office environment to working from home. The result of this was a surge in the vacancy of those office spaces, making many prophesize impending tumbleweeds through Centre City.

However, Calgary’s story is one of re-genesis. Calgary’s successful pivot has three critical components.

Petrostates: A Cautionary Tale

Academics at Fraser Institute argue against diversification citing comparative advantage. This is an economy's ability to produce a particular service or product at a lower overhead than its trading partners, making them the preferred supplier over the competition. Alberta, in an attempt to avoid being the cautionary tale of petrostates, is leaning into diversification and innovation.

Calgary has one of the most youthful and culturally diverse populations in Canada. Calgary was also ranked by the Economist Intelligence Unit as the world’s third most livable city and is ranked the top major North American city in which to build a life.

From Volatility to Innovation and Incubation

Calgary businesses are leading the charge for spending on the digital transformation in Alberta that started last year and is forecast to continue until late 2024.  It’s showing all signs of being a winning strategy. Calgary was once a city marred by its reputation for its volatility of public funds has turned that reputation around through its building of the current Calgary tech scene, which is booming.

Jeremy Shaki, CEO of tech company Lighthouse Labs, noted that both Calgary, and Alberta as a whole, are in formidable fiscal shape right now. “Calgary has been working very hard to build its tech ecosystem and its talent ecosystem.”, according to Shaki.

Is this a siren song or is Calgary emerging from the ashes of oil and gas money a phoenix? According to GeekWire.com Calgary has seen 460 percent growth since 2015 in business incubators resulting in an innovation hub in the core of the Centre City, scaling ambitious ideas to answer global questions. Innovators who seek venture capital to scale their grand vision can find it in Calgary.

Technology juggernauts IBM and Telus are also answering the call by announcing this summer their goliath investments in Calgary with a new innovation centre and a new state-of-the-art headquarters in the city, respectively.

Calgary Pivot Two-Step

The second component of the Calgary pivot two-step is in its leveraging of the existing and robust talent pool of geologists, scientists, drilling technicians, inspectors, engineers, and controllers. This vast knowledge base, when married to the increasingly active Calgary start-up environment done well is an inherently good move. It also addresses the concern raised by the Fraser Institute by both bucking it and heeding it, simultaneously. Quite a clever dance move.

The Trifecta

The last, but certainly not the least element of Calgary’s rebirth is its marketing. Yes, you read that correctly.  Critics of the pivot query whether Calgary has a large enough labour pool with the technology acumen to support the influx of businesses. The Government of Alberta has thought of that too. In a stroke of genius, the province’s economic growth folks have been very purposeful about capitalizing on the migration from Ontario by beating the affordability drum, at technology and innovation events in Toronto.

They’re doing it well and the rhythm is catching. East Village, Mission, Sunnyside, Altadore, and Inglewood have all seen double-digit growth recently. While many other markets are seeing residential properties sitting for extended durations, the inventory at the time of writing this article in Calgary was in the 4700 units down year-over-year from the approximately 6700 units typical of this market’s Fall selling season. That speaks to growth.

Crafting a Clever Investment Strategy

So now for the multi-million-dollar question- if you’re a courageous investor, how do you know where to begin?

We asked that very question of Jesse Davies, Leader and Broker of the Jesse Davies Team. Jesse, a born-and-raise Calgary REALTOR ® and investor himself, heralds the critical nature of working with the right agent. Davies says the secret to his success is in getting to know what motivates his many clients. This allows him to craft a strategy to meet and exceed these investment targets. The result is different, custom options respond to the client’s budget, risk appetite, and goals. “I delve into whether the investor is in it for cash flow, asset appreciation or both. If a client’s salary is over six figures, cash flow might not be their best option. Perhaps, I’ll recommend a smaller cash flow option and they may be a better candidate for using asset appreciation to meet their financial vision.”

When asked where his investor clients get the most bang for their buck in Calgary, Jesse Davies recommends investment in multifamily residential units.  Supply is low but now is a great time to ask your REALTOR ® with knowledge of the area beyond the balance sheet, to find an older building. “By putting a bit of financial and sweat equity into manageable renovations, my clients can increase those rents and can hit a home run in terms of ROI,” Davies reveals.

Two things are evident. In the past, there have been some choppy waters on the horizon for Calgary but with the partnership between the Government of Alberta and business leaders, Calgary has been able to right the ship extremely well, when many thought she was sunk.

The second piece of clarity is that the difference between walking the financial plank or sailing off into the investment sunset in the Calgary market is working with the right real estate navigator.

For investors, whether your story ends with the parable “a fool and their money will soon be parted” or “fortune favours the brave” depends now, more than it ever has before, on who you have at the real estate helm.

Are you interested in investing in Calgary or want to know more about opportunities in the city? Find Jesse Davies online at https://jdrealestatecalgary.ca/ and book a free consultation today. Davies and his team of experienced agents have worked with countless clients to help them realize their real estate goals in Calgary and have the skills and experience to help you find the best investments for your needs.



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