May 2010

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#2
Calgary the only major Canadian CMA still below peak housing price levels: report

CALGARY - Calgary is the only Canadian major metropolitan area where house prices remain below their peak level, according to a report released today by Teranet-National Bank.

The report, which measures prices of all dwellings sold at least twice, said Calgary is still 10 per cent down from its peak in August 2007.

In February, Calgary prices declined by 0.4 per cent from the previous month but were up 2.2 per cent from year ago levels, according to the Teranet-National Bank House Price Index.

It was the second consecutive month of a retreat in Calgary house prices.

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#3
Western provinces to form a common market

Canada`s three westernmost provinces are betting there will be economic benefits in setting themselves up as a common market through the reconciliation of regulations among themselves and cooperation on international trade initiatives.

British Columbia Premier Gordon Campbell, Saskatchewan`s Premier Brad Wall and Alberta`s Premier Ed Stelmach signed the New West Partnership agreement Friday in Regina, a follow up from a promise they made in a joint cabinet meeting held in Vancouver a year ago, which will unroll cooperative efforts from 2011-13.

It will start as the three premiers conduct a joint trade mission to Japan and China in May.

The next step will see the three provinces enter into a common procurement system for tendering purchases on some $8 billion in annual spending between them, in areas such as pharmaceuticals and school supplies, starting in 2011.

And along the way, the provinces have agreed to reconcile regulations in transportation, labour, business registration and financial services through 2012 and 2013.

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#4
Gulf spill gives oilsands a chance to shine

The disaster unfolding in the Gulf of Mexico as a result of an exploding oil rig April 20 not only illustrates the risks of drilling in the deep offshore waters, but once again shows the world`s increasing dependence on the unconventional barrel.

And included in this unconventional definition, of course, is Canada`s oilsands.

As ARC Financial`s chief energy economist Peter Tertzakian often says, "We are going to the ends of the earth to find the next barrel."

The U.S., as the world`s largest consumer of oil, relies on the oil produced from the deep waters of the Gulf of Mexico for one-third of its domestic production. The potential that lies below those waters is why President Barack Obama recently lifted the moratorium on the east shores of the Gulf.

But all of a sudden that option is off the table -- and with it one of the avenues that had been available to the U.S. to increase production and decrease dependency on imported oil.

No matter what happens in the coming weeks and months, the environmental devastation as a result of 5,000 barrels a day spewing from the ocean floor is likely to increase all forms of regulation associated with drilling in that region.

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#5
Gulf`s pain oil sands` gain, experts agree

The environmental evils of the oil sands, whether real or perceived, have been largely forgotten since thousands of barrels of oil began oozing out of the seafloor in the Gulf of Mexico. Louisiana`s tragedy at the hands of the exploded Deepwater Horizon oil rig, experts argue, could be to Alberta`s advantage.

"Without a doubt it takes the heat off [the oil sands] from within the [United States]," said Tyler Priest, an oil historian at the University of Houston`s Bauer College of Business. "Everyone is now focused on the Gulf of Mexico right now."

He and other observers do not mean to sound flip on the subject, considering 11 people died and others were injured in the Gulf explosion that precipitated the spill, and the ecological and economic fallout may linger for decades. Indeed, the entire energy industry could be damaged as people consider the consequences of relying so heavily on fossil fuels.

But in the meantime, images of gigantic ponds of toxic waste and dead ducks in Alberta have given way to pictures of a moving slick of crude -- one that is growing over the ocean and is not bound by barriers.

Oil has been leaking into the Gulf since April 22, two days after a rig leased by BP PLC, the British energy powerhouse, suffered an explosion and fire. An estimated 5,000 barrels of oil per day are escaping after emergency systems designed to shut off the well failed. Officials do not know when they will be able to stop the leaks. It could take months.

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#6
Two fires don`t singe Suncor`s first quarter

CALGARY - Suncor Energy Inc., Canada`s biggest oil and gas company, reported a better-than-expected first-quarter profit yesterday, despite two fires that cut output at its northern Alberta oil sands operations and cost $600-million.

Both upgraders at the company`s massive oil-sands operations near Fort McMurray were damaged by fires over the past six months, cutting production of refinery-ready synthetic crude and damaging Suncor`s reputation as a reliable operator.

"We have made a lot of progress over these last several years at the oil sands and are really a bit shocked to have two incidents like this back to back," Rick George, Suncor`s chief executive, said on a conference call.

"We ... are taking action to try to minimize the possibility of this happening again."

A December blaze at Suncor`s largest upgrader cut its oil-sands operations by as much as 150,000 barrels per day. Just as repairs to that unit were being wrapped up in February, the smaller of its two upgraders also caught fire, cutting output again and forcing the company to lower its annual production target for its oil-sands operations to 280,000 barrels per day from its previous 300,000 bpd forecast.

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#7
Average prices of Alberta re-sale homes to rise by 4% this year: TD

CALGARY - Average sale prices for existing homes in Alberta are forecast to rise by four per cent this year and another 0.6 per cent in 2011, says a report released today by TD Bank Financial Group.

The report says the average price in the province for 2010 will be $355,000 and $357,000 in 2011.

In comparison, average sale prices across the country this year will rise by nine per cent to $349,000 but drop by 2.7 per cent in 2011 to $339,700.

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#8
Calgary home sales to simmer, not sizzle this year

CALGARY - Calgary`s resale housing market is set to simmer, not sizzle in 2010, says the president of the Calgary Real Estate Board as the organization released Monday its data for MLS sales in April.

Home prices during the month dropped from March levels, but remained higher on a year-over-year basis.

The board said single-family home sales in the city rose by almost five per cent last month compared with a year ago while the average price was up by eight per cent.

There were 1,352 single-family home transactions last month for an average sale price of $460,378.

Those numbers, however, were both down compared with March, which saw 1,396 sales for an average price of $471,269.

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#9
`Pause` is over for Calgary commercial real estate

CALGARY - Commercial real estate investors are returning to the Calgary market following a lull in transactions a year ago.

"It`s a very different world today than it was a year ago," said Joe Binfet, managing director for Colliers International in Calgary.

"Last year there was a pause in the decision-making processes. Investors were looking for a bottom to the downturn. But right now we`re seeing a lot of transactions and a lot of activity. There`s a lot of capital available to both private and institutional investors and they`re looking for quality product."

Binfet said there is strong demand for retail and industrial real estate properties, and land is also coming back into favour.

"Developers are showing interest which we haven`t seen for quite some time," said Binfet. "We are encouraged. We have done more transactions (this year) than we did all of last year basically."

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#10
40% of Calgary buyers see condos as an investment: TD poll

CALGARY - The 4th TD Canada Trust Condo Poll released today says 40 per cent of condo buyers in Calgary are purchasing their real estate as an investment property — among the most likely in Canada to do that.

And of those, 41 per cent who bought or would consider buying a condo see a condo as a long-term source of rental income, compared to 35 per cent nationally.

The poll also said that while 26 per cent of Canadians plan on eventually moving into their rental condo unit, only 16 per cent of Calgarians plan to do so.

"Calgarians continue to see the value in purchasing a condo as an investment strategy," says Chris Wisniewski, Associate Vice President, Real Estate and Secured Lending, TD Canada Trust. "Affordability and stable monthly expenses can make condos very attractive for both first-time buyers and investors."

Calgarians are most likely in the country to think that market conditions have improved for buying a condo as an investment, however the number who feel this way has dropped from 52 per cent in 2009 to 38 per cent in 2010.

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#11
Boom-bust cycles help to make Alberta a top target for mortgage fraud

Lax oversight and more than two decades of a boom-bust economy has made Alberta one of country`s top targets for mortgage fraud.

A lawsuit by the Bank of Montreal alleging a $120-million mortgage fraud may be the largest such suit filed in Canadian history, but the province boasts a string of similar, smaller cases, going back as far the 1970s.

The most recent high-profile case involves Ilan Levy, a former RBC employee who is one of eight defendants facing charges for defrauding the bank of $8.9 million. The allegations have yet to be proven in court.

In 2005, the perpetrators behind a wide-ranging scheme involving 280 properties were accused of bilking 22 lending institutions of $30 million. One of those found guilty was a then 61-year-old paralegal and former hairdresser who was sentenced to more than five years in prison.

Mortgage fraud typically involves using falsified documents to inflate the value of a home. The fraudster then takes the loan out in the name of a naive "straw-buyer," someone who receives a fee to sign for the mortgage. The true owner may rent the property, use it as a marijuana grow operation or simply default, leaving the duped mortgage holder to pay the remainder of the loan, which is often more than the actual value of the property. Banks also often take the financial hit.

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#12
MP Devinder Shory among hundreds sued by bank over alleged fraud

CALGARY —Hundreds of Albertans, including Calgary Conservative MP Devinder Shory, are being sued by the Bank of Montreal in what it alleges is a massive mortgage fraud involving $120 million in properties.

In a sweeping lawsuit involving more than 200 properties across the province, the bank claims it lost $30 million in a series of elaborate frauds orchestrated during the province`s real estate boom.

"This one is horrendous," said Al Rosen, a Toronto-based forensic accountant who has investigated a number of high-profile fraud cases.

"There`s just so many people involved in the thing. It`s not a small-time operation."

No criminal charges have been laid in the case, which names numerous city lawyers, including Shory, mortgage brokers and BMO employees as defendants.

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#13
Gulf oil spill may stunt rush to drill Arctic

The oil leak in the Gulf of Mexico may slow any "cold rush" to explore the Arctic, where companies would struggle to clean up spills in remote, icy seas, experts say.

Firms are eyeing opportunities to tap Arctic oil reserves made more accessible by climate change. But the disaster at a ruptured BP oil well has refocused attention on environmental risks.

"The blowout is pretty disastrous for anyone planning to start offshore operations in ecologically fragile areas," said Jonathan Stern, director of gas research at the Oxford Institute for Energy Studies.

"It was already going to be tough in the Arctic."

Royal Dutch Shell, for instance, is facing pressure from conservationists at least to postpone 2010 drilling in the Chukchi Sea off Alaska. They say it would be harder to deploy clean-up gear there than BP has managed in the Gulf of Mexico after last month`s explosion of Transocean Ltd`s Deepwater Horizon rig, which it had hired to drill the well.

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#14
Edmonton home sales repeat `strong` month

EDMONTON — Home sales in April -- first month in what is traditionally the busiest quarter in the resale housing market -- fell 5.9 per cent from the same month last year.

But then again, in April 2009 mortgage rates were falling, federal renovation incentives beckoned and prices had dropped from boom levels.

Fast-forward a year and last month saw three mortgage-rate hikes and the start of stricter lending rules.

There were 1,740 residential sales reported for April, up from 1,571 in March, according to Edmontonregion Multiple Listing Service figures released Tuesday by the Realtors Association of Edmonton (RAE).

That`s down from 1,849 a year earlier.

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#15
Oilsands-to-B.C. pipeline to go ahead

Enbridge Inc. is plowing ahead with a controversial pipeline from Alberta`s oilsands to the inside passage port of Kitimat, B.C., chief executive Pat Daniel said Wednesday.

The $5.5-billion Northern Gateway project faces heated opposition from aboriginal and environmental groups because of the possibility of a spill on land or sea -- concerns that have deepened as bands of sticky oil approach the U.S. Gulf of Mexico coastline following a deepsea-rig explosion.

Enbridge came up with the concept to open new markets for Canadian crude and reduce the country`s dependence on trade with the United States, Daniel said at the company`s annual meeting.

"We`re doing it because it`s important for Canada, for our economy, for our energy security and for our nation`s role as a significant player on the world stage," he said.

The key driver for the 525,000-barrel-per-day pipeline is to open new markets for producers by 2016, rather than increase pipeline capacity, Daniel said.

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#16
Alberta to spend $6B on climate-friendly technology

EDMONTON — More than $6 billion is expected to be spent on climate-friendly technology in Alberta over the next five years -- more than in all other provinces combined, a new report suggests.

The public and private investment through government programs is expected to increase the province`s real GDP by almost $5 billion, according to the Conference Board of Canada.

Alberta and Ontario, which is expected to spend nearly $2 billion, also have the largest greenhouse gas (GHG) emissions, says the report, commissioned by the Alberta-based Climate Change and Emissions Management Corp.

Saskatchewan, Quebec and British Columbia are expected to spend more than $1 billion each.

Canada will need significant investment from the private and public sectors to meet governments` aggressive GHG-reduction targets, said Len Coad, the board`s director of energy, environment and technology policy.

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#17
Advantage Alberta

Premier Ed Stelmach is in Washington, D.C. today for a meeting billed as the North American Energy Security Summit. In attendance will be influential U.S. energy players including California congressman Jim Costa, chairman of the subcommittee on energy and mineral resources, and David Goldwyn, a senior adviser to the U.S. State Department.

A spokesman for the premier said Stelmach will not attempt to use the oil spill in the Gulf of Mexico to Alberta`s advantage. His reticence is understandable, given the significant environmental challenges of the oilsands. To appear triumphalist in the face of the calamity in the Gulf would be insensitive.

There is, however, an opportunity here for Alberta to reinforce the obvious without actually stating it: environmental damage from land-based oil operations remain localized and are more manageable. Compared to the Gulf spill, which could hitch a ride on the Gulf Stream and threaten coastlines from Louisiana to the Florida Keys and even continue up the Atlantic coast of the U.S., the 170 billion barrels of oil locked in Alberta`s oilsands are looking far less risky.

Montreal money manager and investment editor Eric Roseman was one of a chorus of voices this week saying that the Gulf oil spill will make the oilsands more palatable to America. "The disaster unfolding in the Gulf only solidifies Canada`s place as a secure source of oil for the United States," he wrote in a blog post Tuesday. "The United States should look to Canada to secure safely transportable and reliable oil."

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#18
Oilsands emerging as `big winner` in fallout from Gulf spill

The financial world has been rocked by two questions of containment: whether the British Petroleum oil spill can be contained in the Gulf of Mexico and whether the debt crisis can be contained to Greece.

Meanwhile, investors are being buffeted -- no pun intended, Warren -- by volatility that is leaving them seasick.

Don Coxe, strategy adviser with BMO Market Capital and chair of Coxe Advisers LLP in Toronto, said on BNN television that the BP oil spill is "Three Mile Island, but offshore in deep water."

He noted that the 1979 release of radioactive gases after the partial core meltdown at the nuclear-power-generation plant in Pennsylvania had little long-term effect on the world supply of nuclear power, just on where it came from.

"Nuclear power continued to go on and plants were added all over the world, but none over here."

Coxe expects the same will happen with oil after the leak in the Gulf, saying the effects on oil supply and prices are "short-term, a couple of bucks right now on a front-month contract, but it`s not that big a deal. What is a big deal is that there are other projects there that had the potential to be adding significant supply, which are not going to happen."

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#19
Alberta to lead economic growth in Canada in `11 after lagging in in `10

CALGARY - Alberta will lead the country in economic growth next year after falling behind the national average this year, says one of the country`s chief economists.

Craig Wright, senior vice president and chief economist for RBC, said Alberta`s economic growth this year, following the recession, will be 2.9 per cent - behind the 3.4 per cent forecast for Canada.

But in 2011 the province will be "top of the pack" with 4.2 per cent economic growth compared with 3.6 per cent for the country, said Wright, who was in Calgary today.

There is optimism building in the Canadian economy but caution is also present due to numerous risks such as the crisis in Greece, he said.

"(But) there`s still risks out there . . . It does keep us somewhat cautious as we move forward," Wright told a breakfast audience at the Calgary Petroleum Club as he presented his Market Outlook 2010 report on the provincial, federal and international economies.

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#20
Calgary building permit values rise with increased residential applications

CALGARY- The estimated construction value of Calgary building permit applications in April rose from year-ago levels thanks to a strong showing in the residential market.

The City of Calgary said Wednesday that the total value of $275 million last month was up three per cent compared with April 2009 ($267 million) but down 16 per cent compared with the five-year average of $328 million.

It was also off eight per cent from the 10-year average of $298 million.

"The amount of activity remains strong in both residential and non-residential and we are well above values of the same period last year. If this pattern continues, we`ll be on track to have a strong year," said David Watson, general manager of planning, development and assessment for the city.

Residential permit values for April increased by 19 per cent from a year ago to $171.3 million.

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