Alberta Real Estate Investing Success in 2023
Investing in Canadian real estate requires a smart business plan, start-up capital or collateral and a good understanding of how each province’s real estate market differs from the rest. Knowing where the hot markets of today and the future make it easier for you to turn your simple investment into a profitable business.
Alberta is the most populous of Canada’s prairie provinces, and the fourth most populous overall, home to the Canadian Rockies as well as prairies, forests and badlands. Major cities Edmonton and Calgary offer metropolitan entertainment, sporting events and dining, while the vast landscape and 500 natural preserves—including 75 provincial parks—offer plenty of activity for outdoorsy adventurers and nature lovers alike.
Alberta is dominated by the oil industry, agriculture and cattle ranching, the three major industries in the province, and its residents are some of the best paid in the country. Home prices in this province tend to be less expensive than hot markets like Metro Vancouver and Toronto, and there is plenty of room for growth even in the two largest cities. If investing during when prices are low and waiting for things to improve is in your business plan, this province offers many opportunities.
Is investing in Alberta real estate right for you? This overview will help you determine what to expect if you decide to make Alberta the next stop on your commercial real estate venture.
But first, if you are interested in financing your Alberta real estate investments, click the link below for a free strategy call with our team at LendCity.
Alberta’s key features and demographics
Alberta has a population of over 4 million residents. It covers over 660,000 square kilometres and was officially established as a province in 1905. Alberta is on the western side of Canada, bordered by British Columbia to the west, Saskatchewan to the east and the United States state of Montana to the south. The region is home to most of Canada’s western oil fields, which is a thriving industry despite the fluctuating state of today’s oil industry.
Over the last two decades, Alberta’s population has been steadily growing, thanks to its equally growing economy it has one of the highest rates of growth within the country. As of the last census, it had the smallest rate of elderly residents (12 percent) and the largest share of children, who make up just over 19 percent of the total population. It’s one of the youngest provinces—the average age is just 36.7 years old.
When you’re investing in Alberta real estate, it’s important to keep in mind that for the greatest success, you’ll need to target Millennials and Gen Z residents.
The average home price in Alberta was $376,000 in 2020. However, at the time of writing this article, that has risen to a total of about $494,000. As well, Alberta has an oversupply of housing that far outweighs the demand, making it a good time to buy Alberta real estate to benefit from this rising trend in the Alberta real estate market.
The two major cities in Alberta are Calgary and Edmonton, the capital, whose metropolitan areas account for around 1.2 and 1.1 million people respectively. The 400 km “corridor” between these two cities is the most densely populated in the province, housing about 70 percent of the province’s population altogether.
Alberta’s median household income (for both individuals and families) is $72,700, making its residents some of the most well-paid in Canada. In fact, in 2015, the median income was almost 28% higher than the rest of the country. However, income has been declining over the past few years, so keep that in mind when you’re considering investing in Alberta real estate—this is probably not the province in which to invest in large luxury properties if you want to see profits right away.
The province has also made strong pushes to attract trades workers over the year, so when you are planning your investments, it may be worth it to look to upcoming developments in the cities you buy into so that you can create rentals located near these projects. That way, you can become the first choice for professionals looking for a place to live upon arrival.
A focus on oil fields, agriculture and cattle ranching
Up until recently, Alberta’s economy was one of the strongest in the world, at one point even exceeding the GDP of the United States. As of 2017, the GDP was $327.4 billion. These numbers have been falling over the past few years, but remain some of the highest in the nation.
The oil industry in Alberta is thriving; the province is the fourth-largest producer of natural gas and the second largest exporter in the world. In 2018 alone, it contributed $71.5 billion to Canada’s national GDP. Edmonton is home to quite a few refineries, which produce raw materials for the petrochemical industry, and the province (specifically Edmonton and Red Deer) product vinyl and polyethylene products that are shipped around the world.
Alberta is also home to oil sands near Fort McMurray, which are estimated to have oil reserves equal to those found around the rest of the world. Oil sands are more challenging to mine, so when oil prices are high, it is still a profitable endeavour.
When they drop, as they have done in recent times, it’s less cost-effective—but the oil industry is still huge, and real estate near large oil production and mining areas have good potential. As of 2017, the energy industry provided about 7 percent of Alberta’s jobs.
Even with environmental legislation trying to lean away from oil, there are expected to be many years of strong oil-based industry in the province that can make the area a strong investment option for many years to come.
Agriculture is another of Alberta’s major industries. Wheat, canola and other grains are the province’s largest crops, and beekeeping here is the highest concentration in the nation. Because some canola crops require bee pollination, it has become an interrelated industry. Similarly, forestry is a multi-billion-dollar industry within the province, harvesting tinder and other byproducts to send to the United States and China.
Cattle ranching rounds out Alberta’s major sources of revenue; Alberta beef is some of the finest in the world, and about three million cows are living in the province at any given time. They also produce plains buffalo (bison) for consumption and are one of the largest producers of bison meat in the world. Cattle and bison in Alberta are valued at over $3 billion—a hefty part of the economy as well as the culture.
In short, if you’re thinking of investing in Alberta real estate, think about the major industries, who need housing and then tailor your business plan accordingly. Since this is one of the “youngest” provinces in the nation, bear in mind that you need to buy properties with the 40-and-under crowd in mind.
However, this also means that you are going to find a lot of people looking to buy their own homes, which means that if you are a developer, it may be time to look for opportunities in the Alberta real estate market to flip and build to suit those demands.
Discover How To Buy Unlimited Rental Properties With This Step By Step Guide
Best Places to Buy Alberta Real Estate
Calgary, Alberta
Anchoring the southern end of the densely populated Calgary-Edmonton Corridor, Calgary sits just 150 miles north of the border with the United States. It’s the largest city in Alberta, and its population has only surged in recent years as emigrants arrive from across Canada and the world, drawn in by its surging economy. Calgary residents are more likely to be employed in fields like health and education or business services than their fellow Albertans in other areas, so you can count on a consistent flow of high-earning professionals entering the city over the coming years as these industries continue to grow.
Additionally, Calgary boasts the second-highest concentration of headquarter offices in the entire country, behind only Toronto, so you can rest assured that companies that set up roots here are here to stay and grow. The city also boasts an appreciable amount of culture, most notably with athletics. The 1988 Winter Olympics were hosted here, and the city is mad for the NHL’s Calgary Flames hockey team. River rafters and fishermen also take advantage of the beautiful waterways that surround the entire metropolitan area, while the Alberta Ballet and dozens of annual festivals allow for other wonderful cultural experiences.
When it comes to the local real estate market, Calgary is in excellent shape. Sales jumped back in June 2020 by about 55 percent, this is proof that even during hard times like the pandemic, the market still has the potential to hold strong and remain reliable for investors. However, over that same time, prices were down from June of the previous year by about 2.8 percent.
Which, compared to many parts in the country, was not a significant drop, but it is still worth being aware of so that in the event another major downturn impacts the market, you are not caught entirely off-guard.
Edmonton, Alberta
The capital city of Alberta is the second-largest city in the province and the fifth-largest one in Canada. Like many places in Canada, its growth was fueled by the annexation of many other surrounding communities right up through the 1980s. The city is more intertwined with the natural resources industries than its partner city Calgary, and there is a substantial amount of opportunity here as well for the discerning Alberta real estate investor.
Like its neighbour Calgary, Edmonton is well-poised for more growth and development thanks to the economy showing little to signs of slowing down. Again, Alberta’s natural resources are the primary driver here, with some estimating that Alberta’s oil resources are second only to Saudi Arabia’s. Retail is also a primary driver of the economy here, anchored by the West Edmonton Mall, which is the largest mall in North America.
The two largest cities in Alberta represent genuine investment opportunities for the right Alberta real estate investor, but opportunities in the province are not limited only to those two places. Its status as a natural resources mecca means that there will also be extensive opportunities in areas outside of major metropolitan areas, including places like Whitecourt, Saddle Lake, Westlock, Mayerthorpe and many others. Consider properties near the oil fields for short-term rentals, too.
Nothing can replace seeing a place in person after performing extensive research, so be sure that you’re doing your own due diligence before making any Alberta real estate investment decisions.
Alberta Real Estate in Short
Overall, Alberta real estate—especially in or near the major cities—offers a lot of investment potential. You’ll need to take into account current market trends, the demographics and major industries, but a shrewd investor will be able to spot great opportunities. For the most part, buying Alberta Real Estate may involve playing the long game, particularly during the COVID-19 pandemic. However, if you’re able to expend some capital and wait it out, Alberta has the potential for major growth over the next decade.
To network with other Alberta real estate investors, there are multiple meetup groups organized by the major city as well as “Central Alberta,” which are likely your best bets in the Alberta market. Vacation properties near the major recreational areas, such as the national or provincial parks, nature preserves and the Rockies may also prove to be lucrative investments.
The smartest thing you can do when investing in Alberta real estate is to watch how their major industries are faring; as oil prices rise and the industry expands, you can expect to see increased jobs and migration into the province. When these industries decline, emigration is imminent.
Ultimately, Alberta is a semi-rural province with distinct hotbeds of activity. Being one of if not the highest-paid province in the country, the wealthiest buyers have plenty of money to spend on quality Alberta real estate, but while the rents are high, home prices tend to be relatively low for major metropolitan areas. This province is best if you need to get in on the ground floor and can afford to wait until the market returns, but when it’s at full-force, you can expect to see great profits.
Alberta Real Estate Professionals
We have searched high and low for real estate investing professionals in Alberta. Below, you can find professionals we have researched and can confirm they specialize in working with Real Estate Investors.
To ensure the maximum success in real estate investing in Alberta, or any city, you should always use professionals who understand and work with investors, your income depends on it.
This list may not fully list all the professionals in the area, but the ones we have personally investigated and that we would refer our clients to.
If you’re a real estate professional and would like us to consider adding you to the list, please contact us.
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If you would like to learn how you can finance your Alberta real estate investments, click the link below for a free strategy call today.