How Calgary Is Becoming the Best City for Investment

Last October, my first video about investing in Calgary real estate went up on our YouTube channel, newGTAcondos. Throughout the first half of 2021, we studied the Calgary market closely, weighed a wide range of statistical factors, and concluded that Calgary's real estate market had entered exactly the kind of phase where investment is all but guaranteed to pay off very well for investors down the road.

In October 2021, we sold our very first project in Calgary, called First and Park Condos, developed by Greywood, a company we'd already been working with in Toronto for years. Around the same time, we also built relationships with other developers selling projects in Calgary. Over the past 6 months, we've taken part in selling four major projects in Calgary, and all of them sold out very quickly. Today, we can say with confidence that our calculations were right, and that Calgary's real estate market is nothing short of a goldmine for investors right now.

So what factors led us, over the past year, to decide to enter the Alberta market?

For a long time, Calgary's real estate market was heavily tied to energy prices. Back in 2005-2008, when oil prices peaked, the city was booming. Rental vacancy rates were practically zero, and property prices were on par with Toronto's. Then came hard times for Alberta's economy - energy prices collapsed, most companies shut down production that was no longer profitable, and many people moved away to other provinces. Alberta's real estate sector went into its own downturn as well; prices didn't actually fall, but they stopped rising too. From 2010 to the end of 2020 - a full 10 years - property prices in Calgary barely moved at all. By comparison, over that same 10-year period, real estate in the GTA appreciated by 250%.

In 2019, in my view, the Alberta government made a whole series of pivotal decisions aimed at weaning Alberta's economy off its dependence on energy prices. What emerged here was, if not quite a fully free economic zone, then certainly something close to it. Today, Alberta has the lowest corporate tax rate in Canada at 8%, and a value-added tax of just 5%, compared to 13% in Ontario. Naturally, this immediately drew in companies whose operations aren't tied to any particular location.

Since 2019, more than two and a half thousand high-tech companies have either relocated to Alberta entirely or opened offices here, creating thousands of new jobs. Naturally, Calgary real estate became highly sought-after, and prices have been climbing since late 2020. Here's what the numbers for Calgary real estate look like today.

March 2022 saw the highest number of sales in Calgary's history. Compared to 2021, sales rose 80% - 110% above the market's average activity level over the past 10 years. At the same time, the number of listings on the market fell 40%, while prices rose an average of 14.5%, putting Calgary's average home price today at nearly $550,000. On the resale market, we're seeing multiple offers, and buying anything has become just as difficult as it is in Toronto. By the end of 2021, the province had moved into second place after Ontario for housing shortages, pushing British Columbia into third. And yet, today, it's one of the few provinces in Canada where experts consider real estate to still be undervalued.

Over the past 2 years, new construction has picked up significantly in Calgary, and alongside local companies, several major developers from Toronto have entered the market here as well.

It's not just the residential market that's heating up - the office market is booming too. During the downturn, office vacancy rates reached as high as 33%; today that figure is down to just 7.7%, and office rental rates, which had fallen by two and a half times during the downturn, are now close to pre-crisis levels. Where downtown Toronto offices were once dominated mainly by oil and gas companies, downtown Calgary today is dominated mainly by tech companies. The high point of 2021 was Amazon's announcement that it had chosen Calgary as the site for a new cloud computing hub, with Amazon planning to invest more than $4 billion here. That alone will add well over a thousand new jobs to Calgary over 2022-2023. And whenever an investor of that size enters a market, smaller players inevitably follow, adding even more well-paying jobs on top.

Beyond the tax haven we see in Alberta, another important factor is the large pool of highly qualified talent flowing out of the province's 4 major universities. Calgary's authorities have shown real savvy here too, creating excellent conditions for international students. Students arriving from abroad receive full health coverage right away, and after finishing their studies, they can obtain permanent residency fairly quickly through provincial programs - which has naturally led to a sharp rise in the number of international students wanting to study here.

Recognizing the serious housing shortage it was facing, the province has also created ideal conditions for real estate investors. Just consider: there's no 15% tax for foreign buyers, no rent control, no Land Transfer Tax, and no Development Charge on new construction. Investors don't need to pay out and then reclaim the $24,000 HST rebate that we're all used to dealing with in Toronto. In other words, closing costs on new construction here run to just three or four thousand dollars, compared to the far more substantial amounts in Ontario.

On top of that, with prices running at half of Toronto's levels, rents in Calgary are only about 30% lower, which means practically every rental property here generates positive cash flow.

And one last point: the deposit required when buying at the pre-construction stage is one of the most important factors affecting an investment's returns. The smaller it is, the higher your return. In Calgary, deposits across every project run at 10% of the purchase price, rather than the 15-20% typical in Toronto, because the financing conditions developers work under here are entirely different from Toronto's. And for first-time buyers in Calgary, there's also the option of using what's called an Insurance Bond, which makes it possible to buy a pre-construction property with a deposit of just five percent.

Calgary has clearly entered a golden stretch - the province has managed to break free of its dependence on energy prices, and now, on top of that, gas and oil prices are climbing rapidly again, with production about to ramp back up in full. It's not hard to imagine what's coming here in the near future.

Today, our company offers a full range of services in Calgary - pre-construction sales, rentals, rental property management, and related services, exactly as we do in Toronto.

In April and May, we'll be launching several new projects for sale in Calgary. Sign up for our mailing list at www.newGTAcondos.com and you'll get advance notice.

Don't miss your chance to invest in Calgary today, while prices there still haven't caught back up to Toronto's. I have no doubt that those who take advantage of this moment will do very well for themselves down the road!