We wrote last week about how the Edmonton Metro Region will be great for the long term economic prospects of our city. To add to the good news, there are three headlines that give even more reasons to be optimistic for the future.
We have written numerous articles on the correlation of Edmonton’s commercial real estate market to the price of oil. In news that should help bring some stability to our provincial economy, OPEC & Russia have agreed to continue the cuts in oil production. While the market appeared to be hoping for deeper cuts, barring any major economic changes, we expect oil prices to hover in the $50 vicinity for awhile. We might not see $100 / barrel oil for awhile (or ever?) but at least there is some global support to prop up prices for the time being. In fact, looking at the graph for the past three years, there appears to be a trend line around the $50 / barrel going back to 2015.
The Conference Board of Canada released a report predicting Alberta will have the fastest growing provincial economy with a 3.3% GDP growth this year and 2.4% growth in 2018. The Conference Board of Canada describes itself as follows:
- “The foremost independent, evidence-based, not-for-profit applied research organization in Canada.
- We are objective, independent and evidence-based. We do not lobby for specific interests.”
The Alberta Government has also announced a new hospital in southwest Edmonton. It will be located on Ellerslie Road and a couple blocks south of Anthony Henday Drive. While it’s not expected to be completed until 2026, it will undoubtedly spur a lot of new residential and commercial real estate development in the area. There is already $400 million earmarked for the project, which could come in well over $1 billion (based on the cost of the last hospital built in Calgary).
Finally, Canadian Western Bank just reported a 44% increase in year-over-year earnings. The regional bank has heavy exposure to Alberta, so the fact that it is showing increased profitability is certainly promising.
We’re not naively ignoring the perils associated with the worst provincial recession in the past few decades, we just simply believe these positive news stories are leading indicators for the market to start improving as a whole.
Bloomberg, Conference Board of Canada, Alberta Government, Google Finance, BNN