Five No Nonsense Reasons to Invest in St. John's Real Estate

“Real Estate cannot be lost or stolen, nor can it be carried away. Purchased with common sense, paid for in full, and managed with reasonable care it is about the safest investment in the World.”
—Franklin D. Roosevelt
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These days some may challenge Roosevelt’s endorsement of real estate as the safest investment in the world. But history has proven that while there may be fluctuations, overall, real estate is an excellent investment. I could go on and on about why you should invest in St. John’s real estate. Great lifestyle. Amazing people. Unique culture. Scenery to die for. All true. However I know that as a sophisticated investor, you like key economic fundamentals. Here are five:

1. St. John’s leads the country in employment growth While most cities have hit hard times, in St. John’s, employment is up 5.9% and it is currently one of only three large cities in Canada with an unemployment rate below the national average of 8%. The growth is due to unprecedented revenues from the province’s offshore oil sector. Revenues that had Newfoundland and Labrador leading the country in GDP growth before world markets declined. St. John’s accounted for over half of the provincial growth. With the expansion of White Rose oil field, the development of the Hebron field, an expectation that agreement will be reached for the Hibernia South expansion and news from Statoil of a potentially important new offshore discovery, all indications point to continued employment growth.

While the oil industry is reason enough to invest in the St. John’s area, construction has started on the $2.2-B hydromet facility in Long Harbour. NalCor, the province’s energy corporation is moving ahead with the $10-B Lower Churchill project and a power corridor to New England markets.
    
2. Mega Projects Means Industrial Development As the provincial service centre, St. John’s will benefit from decades of development and production life associated with the new boom. Construction of Hebron is set to begin in 2012 with much of the manufacturing to be done in the province.

Vale Inco has begun construction of the hydromet nickel processing plant in Long Harbour (approx 100 Km west of St. John’s). It will be fully operational by 2013.

NalCor, the province’s energy corporation aims to have the projected nine-year Lower Churchill project approved by 2010. A power corridor is proposed to deliver hydroelectricity to New England markets.

The province is investing in new fisheries, ocean and alternative energy technologies. St. John’s is already home to fast-growing firms specializing in ocean technologies, defense and aerospace.

 3. Growing Population For the first time in 15 years the province’s population is on the rise. St. John’s is expanding at a record pace. People are moving here from rural Newfoundland and from around the world to take advantage of the next boom. Hebron will require a workforce of about 3,500 at the peak of its four-to-five-year construction phase. The US$2.2-billion hydromet facility project in nearby Long Harbour will employ up to 1,600 people during its peak construction phase and will need 450 workers during its operation. Thousands of workers will be needed to move Lower Churchill towards first power in 2015. Consider the potential jobs to be created by spin-offs in the service sector and other industries.

4. Prices Still Well Below the Canadian Average Residential and commercial property prices in St. John’s are still among the lowest in Canada. The current ‘balanced’ market is particularly suited to medium to long-term investment by entrepreneurs new and seasoned alike. For example, a well-constructed single family home in move-in condition can still be bought for $180,000-$190,000. A two-apt home for $200,000 can return a monthly rental income of $1600.

The market for furnished executive condos and homes for lease is expected to increase as in previous booms. Property values and rental rates are expected to increase accordingly with land, labour and construction cost increases. The prospect of profitable returns on investment is very favourable.

5. Consider this one a thumps-up from me, a realtor who has invested and will continue to invest in real estate in and around St. John's.

Please contact me if you would like to purchase an investment property or further discuss investment opportunities in St. John’s or surrounding communities.

If you are thinking about buying or selling a home in St. John's area, or have questions about real estate in general, please call or email. I am always available to help.

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