Edmonton is in first spot and Calgary ranks fourth on a list of the 10 best places to invest in real estate around the province.
The assessment boils down to simple economic fundamentals, says Don Campbell, president of Alberta Real Estate Investment Network (REIN). These include the demographics of the community, such as in- migration, the age of the population and the crime rate.
Another is whether the local industries are cyclical.
In second place is Devon, 15 minutes from West Edmonton Mall. Sylvan Lake ranks third. Red Deer and Okotoks tie for fifth place, Lacombe and High River for sixth. They’re followed by Cochrane, Grande Prairie, St. Albert and Fort McMurray.
A number of factors come into play when determining a great place to invest. Campbell notes an investor can’t just go to a town on the list, buy a property and expect to make money. Nor does a good buy in one town mean that a similar product is the best deal in the next town.
A town or city also can’t rest on its laurels or look back to what it’s had, so an important fundamental is its entrepreneurial vision. A forward-looking attitude is one reason why Devon and Sylvan Lake rank high on the list, says Campbell.
Another question to ask is whether the town or city has room to develop, or is landlocked by the surrounding municipality.
Several of the successful towns and smaller cities are near Calgary or Edmonton, or in the corridor between. That trend holds true in what Campbell calls the Farm Team – towns and cities that almost made the Top 10.
They are listed alphabetically as Black Diamond, Lethbridge, Medicine Hat, Rocky Mountain House, Sherwood Park, Spruce Grove, Stony Plain, Turner Valley and Whitecourt.
Campbell likens a real estate cycle to a farming year, though the property investing cycle is several years long, and the “seasons” three years or more. The real estate spring is for buying and summer for nurturing the property.
Real estate fall is for selling properties and taking profits, and real estate winter for planning the next buying season.
REIN was formed in 1992. Its 760-plus members, mostly Albertans, gather each month to discuss market trends and strategies, mostly targeting residential real estate. REIN members own about 7,123 properties worth an average of $90,600, he says.
Though he dislikes using the word boom, Campbell adds: “The real estate market is a living, breathing thing. It will slow down and take a big breath to catch up every boom cycle.”
Meanwhile, Campbell predicts there will be at least one more plateau in the current cycle, meaning vacant apartments with values and rents not increasing as fast as usual.
Such a vacancy plateau is about to occur in Edmonton – but that’s good news for investors who understand fundamentals, he says. People who have bought on emotion tend to become motivated vendors.
“There are only two emotions in the real estate market. One is fear and the other is greed,” says Campbell.
If you focus on fundamentals, you buy in plateaus but sell before the end of the cycle. That leaves value on the table for the next purchaser to ride part of the wave, but it is not for purely altruistic reasons.
“If you shoot for the peak, you will invariably miss,” he says. “I’ve been investing since 1985 and you’ll never be able to time the marketplace.”
Campbell says that in 1989 he told people it was time to sell in Toronto. “The people who got in on fundamentals got out. The people who got in on emotion rode that thing right down to the bottom.”
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CHANGES AFOOT FOR CALGARY'S BELTLINE
A new office condominium development is in the works for Calgary’s Beltline. Genco Properties is the developer of a 13-storey building at 396 11th Ave. S.W. Construction is due to start next September, conditionally on Avison Young Commercial Real Estate’s pre-selling 40 per cent of the building by March, says Fred Clemens of Avison Young.
The company is on track to achieve the goal by about February. Occupancy is slated for a year after construction begins. The floor plates will be 11,594 sq. ft. for a total area of 145,000 sq. ft.
Units will be 2,000 to 3,000 sq. ft. There will be 67 parking stalls available at $25,000 to purchasers of units. Genco, a Calgary company, has developed 10 industrial-condo projects and an office building in the northeast.
