Edmonton: Core thinking

Even though residential sales have slowed in Edmonton, the transformation of the downtown core is still moving forward, as a number of highrise buildings continue to take the place of older single and multi-unit homes.

There are about 11,000 people living downtown and that number is projected to grow to 24,000 over the next 20 years. To prepare, the City of Edmonton is calling for further infilling in downtown neighbourhoods and more medium-density highrise buildings.

The city is also building a 3.1 km light rail transit (LRT) extension heading northwest from Churchill Station in downtown Edmonton to new stations at Grant MacEwan University, the Royal Alexandra Hospital and the Northern Alberta Institute of Technology.

Properties in neighbourhoods near the LRT will increase in value and "outperform" properties in other areas of the city, according to a report published by REIN.

"Edmonton transportation improvements will deliver a 10 to 20 per cent enhancement of real estate values in the region's most affected," the report states. Studies on other cities around the world indicate properties within 800 metres of new transit stations and 800 metres from exits on new major highway improvements generally increase in value.

The LRT extension even makes properties a little farther away from the university a good investment option. And investors looking to convert properties into student housing should have plenty of business since Grant MacEwen University and Norquest College are both rapidly growing, says Jon Hall, communications officer of the Realtors Association of Edmonton.

"They're busting at the seams and building like crazy trying to keep up with their needs," Hall says. In fact, Grant MacEwen has even had to convert hallways and study rooms into classrooms, he adds.

There are a number good deals on older properties for investors, specifically in the Queen Mary Park and Central McDougall neighbourhoods, says the Real Estate Investment Network President Don Campbell, who owns six buildings in the area, including Signature Manor and Fairfield Manor.

While the LRT is a good reason to invest in downtown Edmonton, the proposed NHL arena is not, says Campbell.

The talks between billionaire Oilers owner Daryl Katz and the city to build an arena near Grant MacEwan are in no way confirmed and basing an investment decision on them at this point would be highly speculative, he adds.

"Never invest based on announcement, only invest based on smoke - which means once the tractors are in there and have moved the earth around, then you know it's a go." Once - and if - that happens, Campbell says many investors will be looking to get in on the action.

"The area that surrounds the potential arena is doing very well for investors right now, but if the arena goes, of course, it's going to go absolutely crazy."

Edmonton as a whole saw 680 less residential sales from January to June as compared to 2009. As a result, average prices for resale homes have softened, going from $349,543 in January to $335,397 in June.

But the average prices didn't decrease consistently over the period; rather, they fluctuated roughly between $318,500 and $350,000.

While inventory levels rose 8.2 per cent in May to 8,780 and 6.7 per cent in June to 9,406, and sales fell in both months, Hall says he doesn't "see a cliff for prices in the future."

Rather, prices are expected to decline modestly going into the fall, as they normally do, Jon Hall says, adding that prices will also be held up by many sellers who are unwilling to drop their price.

"There seems to be some reluctance from sellers to lower the price. They bought in the 2006, 2007 and the starting of 2008 market and they saw the peak. Now they're forced to sell, but they're obviously not going to get that price that they bought it at."

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