Why Invest in Edmonton?
Alberta – and specifically Edmonton – will continue to boom as the Fort McMurray oilsands prepare to supply
the world’s energy needs for at least the next 50 years. The Alberta government anticipates daily oil production
to triple to 3,000,000 barrels a day by the year 2020. Ten years later in 2030, that number climbs to 5,000,000
barrels a day. To put that inperspective, bitumen production from the oilsands currently hovers around
1,000,000 a day. Because of its strategic central location, Edmonton serves as a massive transportation hub
for goods and supplies traveling to and from destinations such as Grande Prairie, Fort McMurray, northern
British Columbia, the North-West Territories and even Alaska. Edmonton is the closest major city to Alberta’s
oilsands and as such is home to many of the fabrication shops and manufacturers that provide goods,
supplies, and service to the massive construction projects in the northeast portion of the province. Virtually
every item, raw material, or person in Fort McMurray arrives there via Edmonton.
• Alberta is the world’s third largest supplier of natural gas
• Alberta is the holder of the world’s 10th largest coal deposit
• Alberta is home to the second largest proven oil reserves, second only to Saudi Arabia. Some estimate that
this reserve could be as big as eight times LARGER than those found in Saudi Arabia.
• Alberta has 57% of all remaining investable energy projects on the globe
• Tightening oil supplies and expanding demand mean a global market for Alberta’s energy now and tomorrow
• Oilsands development likely to continue at rapid pace for foreseeable future
• Oilsands accounts for more than two thirds of investment in the province
• Over $100 billion worth of investment in oilsands will generate over $1 trillion worth of economic activity
Why do people move to Edmonton? Over the next decade, upgraders, refiners, petrochemical manufactures
and complementary industries will all need to be built in order to meet the demand. As construction workers
flock to Edmonton looking for one of the many high paying jobs in the energy sector and as our city’s population
grows, so too will the demand “normal” jobs like doctors, teachers, servers, bankers, taxi cab drivers, and
almost any career you can think of. And not only is there an increased requirement for workers in all fields, the
following makes a move to Edmonton even more enticing:
• Alberta enjoys the lowest personal income tax rate in Canada
• Wages are steadily climbing
• When compared to other major Canadian cities, housing is still a bargain
Even after the explosive rise in average home prices, Edmonton remains one of the most affordable Canadian
cities in which to live thanks to above average wages. According to a recent RBC Economics report (RBC
Housing Trends and Affordability; November 2010) , the Affordability Index of a standard detached bungalow in
Edmonton sits at 32.7%. This means that even with an average home price of almost $323,000, only 32.7% of
a typical household’s pre-tax income goes towards home ownership costs. Compare this to a staggering
68.8% of pre-tax income going toward home ownership in Vancouver and you begin to understand why people
are flocking to Edmonton.
According the to the Edmonton Sun, between April 2008 to April 2009, Edmonton’s population grew by more than 30,000 people.
As people flock to Edmonton, the demand on existing infrastructure and housing market will continue to
escalate and with this increase in demand and housing prices, affordability will begin to be a more prominent
issue for new citizens. As a result, people will be forced to move further outside the current city core to find
accommodations that fit their budget (either to rent or to buy). With this urban expansion comes the need for
infrastructure and transportation improvements to provide connectivity to the city and its jobs. With such
unprecedented population gains as experienced over the past few years, infrastructure projects have been
fast-tracked in Edmonton more than any other city in the country. The Anthony Henday Ring Road will provide a
high capacity collector road system around the city with connections to major roadways leading into the heart of
Edmonton. The expansion of the LRT system is designed to offer additional means of traversing this vast city, while reducing commute times and helping ease inner city congestion.
So what does this mean to the sophisticated investor?
Transportation improvements will deliver a 10% to 20% enhancement of real estate values in the most affected
regions. In the future, these areas will outperform the rest. If the market goes up everywhere, these areas will
increase by about 10%–20% more. If the Alberta values drop, these will drop by 10%–20% less. With the
completion of the Ring Road and the extension of the LRT, real estate prices in key neighbourhoods will
increase more quickly than other regions of the city due to improved transportation linkages. Improved
accessibility drives real estate demand. Values in older and more established neighbourhoods are impacted
more significantly than in newer developments. In studies of the effect of transportation improvements on real
estate in other jurisdictions around the world, it was found that real estate value increases occur for properties
located within 800 metres of stations on the new transportation and 800 metres from exits on new major
Conclusion – Edmonton is THE place to invest
• Edmonton is the northern starting point of the Edmonton-Calgary corridor
• Because of its strategic central location, Edmonton serves as a massive transportation hub for goods and
supplies traveling to and from destinations such as Grande Prairie, Fort McMurray, northern British Columbia,
the North-West Territories and even Alaska
• Edmonton’s population will continue to explode as workers from around the world are making their way west to claim their piece of the Alberta Advantage
• Infrastructure projects like the Ring Road, LRT expansions and the proposed downtown arena district all
make Edmonton the obvious real estate investment choice
All this means massive cash injections and an abundance of well paying jobs. This in turn leads to people
from all around the world flooding into the province to take part in the “Alberta Advantage.” While Alberta is
awash in opportunity, it’s decidedly short on good rental properties for arriving workers and their families.
Albertans enjoy the lowest personal income tax rate in Canada. Employment, provincial in-migration and retail
sales growth are all up. City council is spending funds on infrastructure needs such as the Ring Road. Vacancy
rates and unemployment are both low. Oil and gas companies are set to invest billions of dollars north east of
Edmonton on projects like refineries. The province is politically stable and economically strong.
The question is no longer, “Why Edmonton?” It now becomes,
“What’s stopping you from investing in Edmonton?”