Markets Hot and Cold – Calgary R/E Simmering Nicely

Just 6 weeks into the new year and equity markets have shaken off the U.S. fiscal cliff issue to rally smartly over the past 30 sessions, or so.  Not to be outdone, contrarians are issuing increasingly dire warnings this week of “severe and imminent market corrections” which threaten to eliminate recent short term gains and possibly worse.   

Amidst these continuing waves of uncertainty, the ongoing delivery constraints facing Alberta energy producers appear to be suppressing everything from provincial revenues to youth employment figures.  Why, then, do Calgary’s commercial and residential real estate markets continue to outperform most others in North America?  Perhaps because, beneath this choppy surface, two fundamental characteristics continue to underpin investment in Calgary real estate development initiatives:  

  1. Alberta’s energy and agricultural base is of growing importance in the global context, so the ensuing population growth improves demand and revenue predictability; and
     
  2. Moderation of building activity arguably reduces the risk of cost ‘spikes’ which can negatively impact investment returns, even in healthy building markets. 

Our outlook for profitable investment in local urban development initiatives remains guardedly positive over the 2013 – 2014 time frame.  As we forge new partnerships and critically evaluate opportunities to drive out significant, risk-adjusted investment returns, we’ll continue to keep you apprised.

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