Edmonton Real Estate Investor: economy

....another opens.
I read an article today on how Hard Times Generate Entrepreneurs. Basically during an economic crunch we have to be more innovative and aggressive. Focus on a niche market within your customer base and serve them well.

"Small business have to adapt or die.So you have to look at your customer base, modify who you cater to if it's needed, and cater to that demand. . . . People will still need certain services, and the smaller the niche you serve, the more successful your business can be." Vance Gough, instructor of entrepreneurship at Mount Royal College's Bissett School of Business

In our case that would be helping people, who don't have the time to invest or to learn how, create wealth in Alberta oil sands real estate. It's pretty focused - it probably could be more focused like "... helping 30 - 50 year old professionals..." You get the idea - clarity is key.

If you aren't sure who you would be best serving look at your business and see where most of your revenue comes from. Pareto`s Principle (commonly known as the 80/20 rule) applied here would state that 80% of your revenue comes from 20% of your clientele or actions. Pinpointing that 20% would greatly increase the money you earn and decrease the time you spend trying to earn it.

What were you afraid of last year? Do you even remember?

Yesterday I was driving to a meeting and listening to my newest REIN CD's. REIN is a real estate investment group that focuses on Canadian specific real estate investing led by bestselling author Don R. Campbell.

REIN has monthly meetings across Canada but because Todd and I are out of the country so often we get the meetings on CD sent to us at our Japan office.

No matter where you are you have heard of the Alberta Royalties Tax Revision and if you are an investor in Alberta then perhaps you are concerned about what will happen and how it will affect your properties. If you were thinking of investing but the Royalties are holding you back; then you must read on.

Don R. Campbell summed it up nicely. People worry every year, day and minute. There is a no shortage of things to worry about, many people let this stop them from acting. However, if you do let things stop you, you will never get anywhere.

"I can't invest now the _______ have ruined the economy/world" or "Everything is going to a hot place (I don't mean Tahiti) in a hand basket because_____!" can be the excuse de jour.

His Summary of 2000- 2007 will bring back memories:

2000 - Y2k
2001 - Kyoto Accord/9-11
2003 - SARS/ WMD's
2004 - BSE/ Bird Flu/ West Nile Virus/ US Terror Alerts
2005 - Tsunamis, Katrina/ London Subway Bombings
2006 - Oil Crisis $60 a barrel oil
2007 - Rent controls/ Royalties

Of course many were terrible events for those directly affected. How did they affect you then?

His point is if we let every monster under the bed stop us from acting where will we be when the Royalties are just a memory, like the rent controls are today?

I have taken some of the best points from Shell Canada President Clive Mather's interview with The Edmonton Journal, on the scale of development in the Alberta Oil Sands.

Here they are:

"What we're saying is this is only the beginning," Mather said as he escorted U.S. Energy Secretary Samuel Bodman on an oilsands tour north of Fort McMurray."

The oil sands have 400 years worth of oil in that is available for extraction.

"..the world's largest deposits (of oil sands) occur in two countries: Canada and Venezuela, both of which have oil sands reserves approximately equal to the world's total reserves of conventional crude oil. As a result of the development of these reserves, most Canadian oil production in the 21st century is from oil sands or heavy oil deposits, and Canada is now the largest single supplier of oil and refined products to the United States. Venezuelan production is also very large, but due to political problems its oil production has been declining since the start of the 21st century" Wikipedia

"The oilsands are "world class," Texas giant Marathon Oil Corp. added in announcing its $6.5-billion takeover of Western."

To date France, Norway, Japan, China, America, Korea and the EU have put billions into the oil sands.

"Based on an estimated 7,500 local trades people available, additional workers from outside the region or province will be needed." In highly skilled occupations needed by industrial projects, Edmonton oilsands jobs will be more like careers than the traditional feast-or-famine pattern of construction contracting."

This boom is for the long term, the workers who come to work in the oil sands will make Edmonton their home. The most common cycle is to rent for a few years then to buy. If you own real estate in Edmonton you are guaranteed of two things - renters and buyers.

"Environmental effects on local air, water, vegetation and wildlife are also forecast to be modest compared to total accumulated results of decades of Edmonton development."

Canada is proud of it's natural beauty and will protect it. The oil sands are constantly being improved to ensure that the environment will not be damaged. New technology and innovative sources of energy, like geo thermal energy, are being investigated off set the energy required to extract the oil.

"Slowly but nevertheless surely Ontario is being edged out of the driver's seat of the federation. The latest push came this week when the Bank of Canada raised its key lending rate to curb inflation or, to be more specific, to cool the economy of Alberta.

While Ontario still attracts the lion's share of newcomers to Canada, Alberta and British Columbia's populations have been increasing more quickly. Ontario's demographic growth has fallen under the national average for three consecutive trimesters over the past year, a first since 1981, according to Statistics Canada." Read More

An American and his wife were driving in Canada and got lost. Finally, they arrived at some city. They saw a gentleman on the sidewalk, so they stopped. The wife let down her window and asked, "Excuse me, sir. Where are we?"

The gentleman replied, "Saskatoon, Saskatchewan."

The wife rolled up the window, turned to her husband and said, "We really are lost. They don't even speak English here!"

I can't read an article about real estate without hearing about "Saskatchewan's Boom" I am just not buying it. I have always wondered what is the economy there and what is fueling it? I know there are a lot of natural resources there and perhaps oil but nothing in the same league as Alberta. Here is a great article from a Saskatchewanite with a realistic take on the Saskatchewan Boom.

The Leader-Post
Published: Friday, June 29, 2007

Premier Lorne Calvert and Mayor Pat Fiacco love to go on tours to Alberta to recruit people to come to Saskatchewan to work and live.

The only problem is that there is no work.

How do I know this? I know this because all of my friends from high school are living in other provinces, mainly B.C. and Alberta, and this is not because they love the ocean or the mountains ... it's because that's where the work is.

Over the years, I've tried applying for many jobs in Saskatchewan, but have not received any interviews, let alone offers -- while at the same time there have been many more opportunities in Alberta with quite a few interviews and some offers. Why is there such a difference between the two provinces?

Sure, Alberta has more people and, of course, the oil sands, but Saskatchewan has a lot to offer, too. There could be many more jobs here if government actually went out and searched for industry to come to Saskatchewan and set up policies to entice companies to relocate here.

Saskatchewan is one of the most affordable places in the country -- unlike Alberta, where the cost is sky high. I'm sure it would be easy for companies and their workers to find office and housing space.

I know the real estate market is booming here, but do you know why that is? It's because Saskatchewan is the last place in the country to experience it.

Why are all the prices for houses going up? Is it because of new industry, more jobs, people moving here from other provinces? No, it's because real estate investors and speculators from other provinces know this is the only affordable place to buy. So, yes, in the short term, prices will go up. But in time, the market will drop because nobody earns enough money to afford these new prices.

Remember, Alberta's oilsands have really been developed in the last few years, which has fueled the boom there, driving up real estate prices. However, Saskatchewan is experiencing a boom, but there is no new industry here.

There are some jobs available in Saskatchewan, such as for doctors and nurses, but guess what? It's like that everywhere else in Canada! Even in Alberta, where doctors recently received a considerable raise in salary.

Fiacco and Calvert can promote Saskatchewan all they want, but it's a complete waste of time if there are no jobs here. And when I say "jobs", I don't mean call centres and retail. I mean jobs where people can afford to have a family and a nice quality of life. To do that, it will take some work and thought on to how to entice companies to move and grow here.

That is what our leaders should be focusing on.

Until then, I'll be in Alberta, building my career.

Michael McKinlay

Regina

© The Leader-Post (Regina) 2007

Wherever Calgary goes Edmonton is sure to follow. As the Calgary market cooled a little in the first quarter of 2007 everyone is nervously waiting for a market drop.

The rock solid economic fundamentals of both markets will not allow a big price reversal but a little cooling of the market is nothing to be afraid of.

In fact we welcome it.

Multiple offers on properties that often go unconditional (not a good thing), rapidly raising housing prices and little product have made picking up properties really hard in the current market. We need the market to slow down a little so we can position ourselves for the next big wave. Just remember cool doesn't mean bust.

Even with a 52% price increase over the last twelve month Edmonton is still number one in Canada. This is not a bubble either the economic stability of Alberta and the future of the Alberta Oil Sands proves there is still a lot of profitable investing left to do.

analyst

Ron Chalmers, The Edmonton Journal

Published:�Wednesday, October 18, 2006

EDMONTON - Edmonton may be the world's best city for real estate investment, says Vancouver analyst Don Campbell.

"Fundamentally speaking, Alberta's economy is as good as it gets," he writes in his latest issue of Top Ten Alberta Investment Towns, released Tuesday.

High energy prices, rapid population growth, low unemployment, good infrastructure and affordable housing make our province "the number one region in Canada -- if not the world -- in which to invest," he writes.

Campbell's "top ten" list actually contains 15 Alberta municipalities -- counting Sturgeon and Strathcona separately. Edmonton is number one for the fifth consecutive year.

PricewaterhouseCoopers recently credited Edmonton with "one of the most diverse economies of any city in North America," Campbell notes.

"Economic diversity provides economic stability, meaning that Edmonton is no longer prone to major upward or downward swings," he writes. "This type of stability is what long-term real estate investors are seeking."

Campbell points out that "Edmonton is strategically located between one of the world's most stable oil supplies (the oilsands) and the United States -- the world's largest energy consumer."

On his standard scorecard, Campbell gave Edmonton a perfect 13 out of 13 for factors such as rising population, jobs and incomes, economic diversity, affordable housing, political leadership, infrastructure and lifestyle.

He upgraded Grande Prairie, "a city that is poised for greatness," from eighth to second position. "Grande Prairie has become an economic power, diversifying its economy away from just forestry by becoming a major service centre for the growing oil and gas exploration industry," he writes. "Most major retailers and restaurant chains have set up shop to service this growing population."

Campbell cites Money Sense magazine as recently naming Grande Prairie the fourth-best place to live among 108 Canadian cities.

The Bank of Montreal chose it as number three for small business activity.

But Grande Prairie's tight real estate market squeezes some residents. "The city has recently entertained an idea to build 'garages' to enable residents in the cold winter months to continue living in the trailers and tents that they stayed in over the summer," Campbell reports.

Calgary placed third on his list.

"However, housing prices are becoming increasingly expensive for the investor as they search for potential cash-flow," Campbell cautions. "With the difficulty of new migrants finding a place to live in Calgary, we will see these people start to focus on other regions of the province."

Campbell is president of Real Estate Investment Network and author of Real Estate Investing in Canada, the bestselling Top Ten Investment Towns, which sells for $49.97 at (888) 824-7346.

TOP ALBERTA INVESTMENT TOWNS

1. Edmonton

2. Grande Prairie

3. Calgary

4a. Red Deer

4b. Sturgeon-Strathcona

5a. Lacombe

5b. Sylvan Lake

6a. Okotoks

6b. High River

7a. Devon

7b. Fort McMurray