Resilient Alberta, Could Very Well be a Diamond in the Making

Rohit Gupta President Rohit Group of Companies Matt Rachiele Managing Director, Calgary Colliers International

From a socioeconomic perspective, Alberta remains the “Wild West” of Canada. With its significant weighting to the oil and natural gas sector, it has historically ridden staggering bull markets to a level of prosperity most provinces could only dream of. Yet it has been fighting for its survival against a vicious commodity bear market since the end of 2014, further aggravated by pipeline constraints and now by COVID-19. This once prosperous and debt-free province is scrambling to reinvent itself in the face of some of the most significant challenges in its history – and we have complete confidence it will succeed.

Albertans have been on an economic rollercoaster for the past 50 years, with commodity price volatility, regulatory changes and at times fiscal policy driving explosive economic “booms” and

“busts”… but this battle-hardened province has always managed to foster entrepreneurism, continuously innovate and identify market opportunities to help propel it forward. It has consistently been the third largest contributor to our national GDP, generating over $300Bn per annum in each of the past 8 years (with less than 30% of that being attributable to oil and natural gas development).

Alberta is home to ~12% of Canadians. Its two largest cities (Edmonton and Calgary) have some of the youngest populations nationally, among the highest incomes per capita and offer an incredible quality of living. However, Alberta has been a political lightening rod Federally for some time now, increasing the perceived risk for investors considering existing or future investment and likely dissuading many from moving here. In response to that, Alberta is now leading the charge on the ESG front with significant new initiatives tied to alternative forms of energy and recycling. www.realestateforums.com Why invest in Alberta? The recently created agency Invest Alberta points out that we have the most competitive taxation system in Canada (8% corporate tax rate; no payroll, sales or capital taxes); the highest GDP growth nationally in the past 10 years; 700 projects totaling over $160Bn proposed or under construction; investment per capita nearly double the Canadian average; and 71% of our workforce has a post-secondary education.

From an operator’s perspective, the low investment cost base, expedited approval process and favourable tax regime minimize the tail risk and position Alberta favourably relative to other jurisdictions. Almost exactly a year ago, the Economist ranked Calgary, Canada’s youngest city at 37.4 years old, as the “Most Livable City” in North America and 5th Globally. To the North, Edmonton has realized among the highest population growth rates of any major Canadian city over the past 10 years. Both are ideally situated with their abundant high class office availability and affordable housing to capitalize on the impending transition of technologically savvy foreign nationals exiting the USA due to the H1B visa crises developing.

Kissinger once said that “a diamond is merely a lump of coal that did well under pressure.” We believe Alberta is already churning out diamonds and that many investors will ultimately regret sitting on the sidelines for too long, similar to the space and asset acquisition scramble we’ve seen playing out in Montreal.

Our main message at this year’s Forum is that Calgary, Edmonton, and rural Alberta have much to be proud of and our provincial economy is far more resilient than people give it credit for. And while the optimists, pessimists and realists are still arguing over the proverbial Alberta “glass of water”, we believe disciplined opportunists with the foresight to see past the current market turmoil will start drinking it up.