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LNG development spurs one of Canada’s hottest investment opportunities

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With a $40 billion LNG (Liquefied, Natural Gas) export facility being built in Kitimat, British Columbia, real estate investors have been presented with a golden opportunity for returns on their investment seldom seen anymore in the Canadian market.

Kitimat, already named the top western Canadian city for real estate investment because of the LNG terminus and pipeline, is getting a boost from Riverbrook Estates, a master-planned community being developed by Kerkhoff Construction with 47 homes slated for development during the first phase alone.

To learn more about one of Canada’s hottest real estate investments, .

The foundation of sagacious real estate investing is robust knowledge of market fundamentals, and with the largest private sector investment in Canadian history, Kitimat has emerged as a diamond in the rough, says Jason Pender, a partner in Riverbrook Estates and owner and CEO of JV Development Group.

“It’s the best place to invest in Canada, and the reasons behind that are LNG is the biggest private sector investment in a single project and it’s in Kitimat where the population is 8,000,” said Pender. “With an estimated 7,500 to 10,000 construction workers coming over the next six years, it’s effectively doubling the population of Kitimat in the same period.”

The site of Riverbrook’s master-planned community will soon become dotted with a slew of new single-family homes, townhomes, apartments, and a modular home park and is only a two-minute drive from Kitimat’s downtown core.

“Over the course of a six-year construction period, there will be a shortage of housing—or very, very strong demand for housing, whichever way you want to look at it—and we’re projecting vacancies will be sub-zero by mid-2020,” said Pender. “With a sub-zero vacancy rate, the lack of supply especially new housing and pent up demand will drive revenues with projections to even surpass Fort Mac in its heyday.”

Occupancy for the first phase will be between the second and third quarter of 2020, and the entire master-planned community’s entire build-out is anticipated to last 36-42 months. Units are currently on presale and already 40% have been sold.

The LNG project is estimated to generate 500 high-paying permanent jobs post-construction, and with workers’ family members boosting the community’s numbers, ancillary services, health, hospitality and educational growth will also come to Kitimat.

“Kitimat is estimated to grow by 20-25%,” said Pender. “Furthermore, a second LNG project known as Kitimat LNG is projected to announce a final investment decision between 2022 and 2023, which, if it goes ahead, will provide Kitimat with significant demand and explosive growth for decades to come.”

With construction costs expected to increase 10% year-over-year going forward, investors who get in early will enjoy lower buy-in prices, thereby optimizing their cash-on-cash return and asset appreciation.

 

About the Author

Neil Sharma is the Editor-In-Chief of Canadian Real Estate Wealth and Real Estate Professional. As a journalist, he has covered Canada’s housing market for the Toronto Star, Toronto Sun, National Post, and other publications, specializing in everything from market trends to mortgage and investment advice. He can be reached at neil@crewmedia.ca.

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