I am asking fellow investors who have real estate properties in Alberta about what will be the future state of Alberta as the pipeline project also got shelved recently. Please share your comments and wise thoughts.
Flat for a while. Be cautious but not overly negative. A hardy province and oil & gas is needed works wide for decades to come, with rising prices. Even had lithium for electric batteries, sunny and loads of ag opportunities and engineering jobs in cheap office space.
I think oil prices will stay down for a while, but the oil industry its not going away anytime soon.
The natural gas industry is strong and on a positive price trajectory.
The pipeline project was halted by Biden's administration, but there is already a rebuttal from multiple states plus AB. And a presidentail term is only 4 years; this project will move ahead at some point. North America needs energy independence, and the US needs this oil, even if its just to help them mine/develop/build their Utopian green energy visions.
Specific to the real estate: Tons of cheap office space available in AB with currently high vacancy, but - opportunity for future re purposing?
On the residential side, low inventory/steady prices for detached homes and an over supply of condos. Good multifamily or industrial deals are hard to find.
If you are considering (residential or multifamily) development, Edmonton has arguably the cheapest land in the country (for major cities anyway), and the city is favourable to developers offering higher densities and more flexibility with infill projects.
I see BIG potential for the future of investing in Alberta, but Im probably easier convinced than many lenders.
Bad time to be starting a multi-family project in Edmonton imo - rental or condo. Supply > Demand. Rental vacancy is at 7.2% and multi-family starts increased substantially in 2020 despite lower immigration and the pandemic. Other negatives are rates are slowly increasing, financing more difficult (no cmhc flex) and high inflation in construction costs. More negatives than positives. I'd expect multi-family starts will fall dramatically in 2021 and immigration levels should be back to target in 2022 so eventually it may tighten but that will be years away.
From a residential rental perspective, I believe we are going to see downward pressure on rental rates especially for multi family apartments, condo apartments units and single family detached homes. I think townhomes and duplexes will remain flat and holding albeit there is less demand for single family detached rentals currently.
Caveat: I'm always wrong about predictions, and the following are my opinions, crafted after careful consultation with the voices in my head.
Keystone was never going to move a drop of oil. The former POTUS approved it to kill all political/economic will in Canada for a pipe of any consequence either to eastern Canada or tidewater. It worked beautifully and Energy East was dead within 2 months.
Which leads us to --> The AB gov put up to $7B into a project that a 5th grader could see would never fly. And said government gave away $4.5B to energy co's without attaching a single job to it(in fact, there were instant layoffs). Even the most inept of leaders would have figured out a way to get a few hundred, or thousand jobs out of that one. And it took them about 10 seconds (I'm exaggerating) to lose almost $2B in pension money.
And instead of cooperating with the feds in every way possible to try to make sure the one pipe that can take our mud to the coast happens as quickly as possible, they continue to pour vinegar on the hive, and wonder why they're not getting the honey.
Which leads us to --> As long as AB has leadership who excel at shedding jobs, losing money, and blaming the feds for everything, AB will struggle. We will never diversify, because if it's not energy, these guys take the attitude of, "kill it before it grows." We can never be a tech hub because there is an unwritten rule that anyone who wants to be one must be within 3 hours by airplane to Silicon Valley.
And the Canadian Gov is another problem - and has been through all PM's of the last 50 years - placing roadblocks in the way of Canada's energy while importing from afar.
As well, some of the mega investors have gone. They're thinking, "Why should I invest a trillion dollars into this thing that I have no control over, and which *might* make me some money in 10 years or go bust, in an environment that is somewhat hostile to business, when I can drop a few billion into a project in Nigeria, or North Dakota, or ___________ and get my money back in 18 months?"
Which leads us to --> a decade of more layoffs, economic decline, and frustration, other than the odd mini-booms caused by inevitable jumps in oil prices.