Top Canadian Regions for Real Estate May 2, 2006

REIN's list of Canada's top residential property investment hotspots includes the Alberta cities of Edmonton, Grande Prairie, Alta., and Calgary.  REIN views these as having great prospects for long-term growth.

Other cities occupying the top positions in the list include Kitchener-Waterloo, Hamilton and Barrie in Ontario, Fort St. John in British Columbia and Halifax in Nova Scotia.

Look to the long-term

The key to these markets is looking at them as long-term investments for capital appreciation as short-term rental potential remains uncertain.

"This is for long-term fundamentals. Long-term hold,'' said Don Campbell, a real estate consultant, author and president of the Real Estate Investment Network.  "The next three years all kinds of regions across the country are going to look spectacular. But these ones will outperform over the long period of time.''

Richard Corriveau, regional economist for the Canada Mortgage and Housing Corp. for the Prairies and Territories, said that the "one thing you can bank on is future appreciation."

"The difficulty for investors will be how do you cash flow a property," Corriveau said. "You purchase a new condominium, a new single-family home (they) might be very difficult to cash flow a property. A renter might not pay your carrying costs but you'll get the return at the back end of the sale once your home appreciates.''

It remains unclear, however, how many people are buying residential real estate for purely investment purposes as opposed to using them as personal residencies.  There is also the question of speculative opportunistic investors versus those in it for the long term.

"The question remains whether they are speculative investors and they intend to flip the property prior to the structure even being completed or whether they intend to rent it to people," Corriveau said.

The hotspots outside Alberta

In British Columbia, Campbell said that there's no question the Fort St. John region (and Dawson Creek) is "the No. 1 place to buy for investors.''  And in Ontario, it's the Kitchener-Waterloo and Cambridge triangle.

"We're actually calling that the economic Alberta of Ontario. It's got strong, strong growth and lots of in-migration and average income is increasing quickly. If I was to invest anywhere outside of Alberta, that would be my second choice. Absolutely,'' Campbell said.