Edmonton’s skyline has been seeing some big changes over the past 10 years with 10 new towers going up, including Stantec Tower, the tallest of its kind in Western Canada . But the shift isn’t just aesthetic - it’s an economic shift as well, one that suggests positive momentum for the future.
According to a 2017 report by Edmonton’s Downtown Business Association, more than $5 billion was spent on construction projects in Edmonton’s downtown between 2012 and 2017, with several more projects still in the works.
Much of the growth has occurred as part of or in response to Edmonton’s ICE District project, a 25-acre development combining condos, a public plaza, entertainment and retail space, all centered around the Rogers Place arena.
While many people see growth in the downtown core as a welcome shift toward making downtown Edmonton a more attractive place to live, work and play, it may also be shaping up as a welcome place to invest as more office space is created and updated and major construction projects continue to bring new amenities - and more people - to the core.
One way to get a stake in this momentum might be real estate, and investment real estate in particular. As it turns out, there are a few things happening in Edmonton that are making Edmonton a particularly attractive place to invest right now.
Condos Are Becoming More Affordable
According to the Realtors Association of Edmonton, the average sale price of a condo in Edmonton was down 4.35 per cent in May 2019 compared to the previous year, continuing to follow a year-over-year downward trend. While prices are hardly crashing here, they are on the soft side, making it a good market for potential investors, especially in light of rental rates.
Rental Rates Are Strong
According to a report released in May by Rentals.ca, the median asking rate for rent is declining in most Canadian cities. Not in Edmonton, though. Every major postal code in the city has seen increases in average rents over the last six months. Rental inventory in Edmonton is also shrinking, which is expected to continue to push rental rates higher. That definitely isn’t good news for renters, but for those who are holding and investing in rental properties, strong demand is a strong indicator of a solid investment. According to a report released by the National Bank of Canada in January, average monthly mortgage payments on median-priced condominiums in Alberta were lower than rents.
Some downtown properties are also offering additional amenities and features to attract investors. SKY Residences, for example, offers a two-year, professionally managed rental guarantee for investors.
More People Are Choosing to Rent
Thanks to an increase in rental options - along with tighter mortgage rules and a weaker economy - more potential home owners are waiting it out on home ownership, choosing to rent instead. New mortgage guidelines introduced at the beginning of 2018 imposed new stress tests for uninsured mortgages, increasing the barrier to entry for new homebuyers who may not have a large down payment. Interest rates have also been rising, reducing the affordability of a mortgage. Although housing is becoming somewhat more affordable in Edmonton again, home ownership rates have been sliding across Canada, according to the most recent Census. As it turns out, young people are increasingly gravitating toward the flexibility of renting, as well as the increased amenities many developments are offering.
Population in Edmonton Expected to Continue to Grow
Along with other pressures spurring Edmonton’s rental market, the city’s population has been growing by 2.56% annually since 2015 - more than twice the national average - and is expected to continue to grow in the coming years, although at a slower rate. Combined with Edmonton’s relatively low rental vacancy rate, this should help to keep rental rates at an attractive level for investors.
Downtown Edmonton Is Becoming an Increasingly Desirable Place to Live - and Invest
Finally, with all the changes happening in downtown Edmonton, it’s becoming an increasingly desirable place to live, work and, therefore, invest. According to a survey conducted by the Downtown Business Association in 2017, downtown residents chose the area for walkability, lifestyle and proximity to work. Eighty-three per cent of downtown residents also said they had a favourable opinion of the area. As the core continues to transform, bringing in new businesses, this trend is likely to continue.
As downtown Edmonton continues to expand, the rental market will offer unique opportunities for investors. The changing skyline is more than a pretty picture, offering opportunities for businesses, citizens and investors alike.