Calgary Ranked Number 1 in Both the World and Canada for Commercial Real Estate Returns
What Makes Alberta’s Commercial Real Estate so Attractive Today?
Calgary was ranked both number one in the world and number one in Canada for commercial real estate investment returns last year, with investments yielding stellar 21.6% returns. Even if that slips slightly this year, neighboring Edmonton is ideally positioned to fill its shoes. Commercial vacancy rates in both Calgary and Edmonton continue to fall, and despite increased construction supply it just can’t seem to keep up with demand, leading to a continued upward push in prices and equity as well as income returns.
The National Post’s most recent list of top ranking Canadian companies, the FP500, showed a massive jump in leading corporations being headquartered in AB, further strengthening the economy and commercial real estate market. Last year Calgary alone saw its companies on the list shoot up by 11.4% and revenue by 31% to over $337 billion for 137 companies. These numbers don’t even factor in the anticipated results of the Alberta mission to Asia to raise more interest in investing in the province, as well as $20 billion already recently invested into the energy sector.
Why Does Alberta Remain the Best Investment Choice for Sustainable High Returns?
While there have been other international cities delivering returns in the 9-11% range, UBS analysts point out some are unlikely to be sustainable for much longer. However, Alberta is different. While other cities are benefiting from panic investing as fight capital takes to the skies in a rush, Alberta’s investment is much more grounded and long term.
Yes, there is a great amount of investment coming in from Asia, Europe and the U.S. due to fear and getting ahead of changing regulations and frothy markets but Alberta isn’t just relying on real estate to prop up the economy. Its strong energy backbone and position as a strong world financial center provides long term stability. Just look at the strengths of financial institutions like Credit Union Servus who recently posted a 61% rise in profits.
Additionally, much of the investment in AB is interprovincial and at the start of a cycle, which will see many Canadians relocating to the province for the long run. New mortgage rules, declining home values in eastern provinces, and jobs will force more and more Canadians to Alberta to preserve their prosperity for at least the next 5-20 years, propping up commercial real estate returns. While Calgary may still continue to claim the most spotlight in the news in the short term, Edmonton is really just beginning its best growth phase, highlighted by the groundbreaking of the new hotel opening the gateway to the Quarters development.