A Region Positioned for Growth

Transcription

1 A Region Positioned for Growth

2 Table of Contents Title Page Introduction 3 Local Infrastructure 4-6 Economic Profile 7 Transportation 8 Local Economies 9 Job Growth Population Growth 12 Real Estate Market Conclusion 14

3 Introduction As a leader in residential real estate investments in British Columbia, Western Canadian Properties Group (WCPG) is dedicated to offering clients the highest quality investment properties in high growth regions throughout Western Canada. With over 20 years of experience, WCPG identifies specific regions that are well positioned for growth. By offering clients turnkey investment opportunities, our goal is to assist individuals in expanding their investment portfolio to include investment real estate. When selecting a region to develop, WCPG focuses on three main factors that contribute to a sound real estate investment. These factors include economic growth, job growth, and population growth. Through extensive research, WCPG identifies regions that best exemplify these fundamentals that contribute to better than average returns. Located within the Montney Basin, in the Peace River Region of Northeastern BC, Fort St. John and Dawson Creek are experiencing the effects of a massive resource boom. With proposed infrastructure developments totaling over $60 billion, Northeast BC is experiencing rapid job growth and population growth significantly increasing the demand for housing as supply struggles to keep pace. Currently, the Peace River Region is considered fully employed and has the lowest unemployment rate in the province, well below the national average. With a 50% projected increase in net new jobs over the next 7 years, workers will need to migrate to the region to satisfy the increased labor demand. 1 As the population of the region grows, the demand for accommodation grows as well. Currently, the vacancy rates are so low, that many people who do find jobs in the region struggle to find a place to live. Recognizing this opportunity, WCPG has purchased land throughout the region and is now developing rental properties available for purchase by individual investors. With a top of the line management team, WCPG offers the opportunity to investors across Canada to take advantage of the largest resource boom in Canadian history. Page 3

4 Local Infrastructure To accommodate the anticipated increase in population, the city of Fort St. John has been investing in infrastructure. A public/private partnership, the construction of a new hospital began in 2009 on 40 acres donated by the City of Fort St John. The old hospital had only 44 beds and failed to meet the needs of the growing population of Fort St. John and its neighboring communities. In July 2008, the provincial government accepted the city s proposal for a new hospital. The Fort St. John Hospital and Residential Care project includes a 55-bed acute care hospital and an additional 123 beds for a residential care facility, which replaced the aging North Peace Care Centre. Construction on the $301.8 million project began in 2009 and the hospital opened its doors June Fort St. John is also the proposed site for BC Hydro s Site C Project. In May 2010, it was announced by the provincial Site C Dam will create between 35,000 direct and indirect jobs. -The Vancouver Sun government that the project had been given a preliminary goahead. On June 13 th the Peace River Regional District announced it had signed a 70 year legacy benefits agreement with BC Hydro for $2.4 Million per year in recognition of the contributions it will be making to the project. The need for energy in the province is expected to increase by 40% in the next 20 years 3. The new dam will provide electricity for an additional 460,000 homes and will be located approximately 5 minutes southwest of Fort St. John, on the Peace River 4. Housing demand and values in the city of Fort St John will begin to experience a ripple effect from the population increase caused by the construction of the dam. The ripple is expected to begin in rental properties and starter homes before working its way up to higher-valued properties 5. The government estimates that the dam will be completed and online by An airport expansion is also in the talks. No dates have been given for the North Peace Regional Airport expansion; however, the airport recently posted a commercial development plan on its website, detailing some of its ideas for future construction at the airport. As Northern British Columbia continues to grow due to the booming oil and gas sector, Fort St. John lies at the center of increased future investment. With major projects underway in the Peace River Region, job and population growth in the area is expected to accelerate rapidly in the near term. Page 4

5 MAJOR PROJECTS IN PEACE RIVER REGION BC Hydro Transmission Project 7 $250 Million Investment Upgrading in preparation for proposed regional projects Construction Jobs: 110 Per Year Est. Completion: Early 2015 Shell Reclaimed Water Project 9 $17 Million Investment 4,000 Cubic Meters of water per day Supports up to 12,000 Households Construction Completed Gordon M. Shrum Generating Station Upgrades 11 $402.3 Million Dollar Investment Upgrading in preparation for proposed regional projects Air Liquide Liquid Nitrogen Plant $60 Million Investment Located in Dawson Creek Nitrogen Air Separation Plant Completed: Mid Natural Gas Liquids Extraction Project 8 +$1 Billion Investment Infrastructure will increase Natural Gas Liquids in Northern BC Construction Approved Est. Completion: Late 2015 Natural Gas Processing Plant 10 $1.5 Billion Investment 300 Workers On-Site During Construction Jobs support over 1.2 Million man hours Est. Completion: Late 2013 CalFrac Chemical Storage & Head Office 12 Multi-Million Dollar Investment 20,600 SQFT Chemical Storage Facility 30,600 SQFT Office Space Ferus Liquid Nitrogen Facility 14 $40 Million Investment Constructed for the purpose of stimulating the production of clean-burning natural gas Completed: Early 2012 Shell Groundbirch 15 : (See Figure 1) Multi-Billion Dollar Investment Petro China Purchased 20% Stake for Est. $1 Billion 9 Natural Gas Processing Plants Creating 2,700 Construction Jobs Currently Holds Approx. 200 Permanent Jobs Potential Expansion to Supply LNG Demand Figure 1. Location of Shell Groundbirch Project Page 5

6 Coastal Gaslink Pipeline 16 $4 Billion Investment 700Km Pipeline from Dawson Creek to proposed LNG facilities on Northern BC s Coast Creating 2,500 jobs over 3 Years Est. Construction Start: Mid 2015 Cutbank Ridge Partnership 17 Multi-Billion Dollar Investment Mitsubishi invested 2.9 Billion for 40% Developing 1.15 Million acres of undeveloped land Creating 10,000 ongoing jobs in BC over the next 20 years Site C Clean Energy Project 18 (See Figure 2) $7.9 Billion Investment Located minutes away from Fort. St John Creating 33,000 Direct and Indirect Jobs Now Hiring: Senior Procurement Advisor o o o o o Job Description: Contribute to design and implementation of the procurement of Site C Oversee: Contract Administration of Construction Supply and Service Contracts Figure 2. Rendering of Proposed Site C Clean Energy Project Page 6

7 Economic Profile Horn River & Montney Basin (See Figure 3) According to the Canadian Association of Petroleum Producers, production from Horn River and Montney Basins could account for 22% of North American Shale Gas production by Fort St. John The Canadian Gas Association forecasts that the combined 52 billion cubic meters per year could be produced from the Horn River and Montney Basin in 2020; equivalent to 70% of all the gas Figure 3. Location of the Horn River and Montney Basin that was used in Canada in The Horn River Basin is the third largest reserve of shale gas in terms of potential marketable gas 21 The Horn River Basin shale contains 78 trillion cubic feet of marketable natural gas, roughly 20% of Canada s total production. 22 Currently, the Horn River and Montney Basins are receiving large investments from foreign companies planning on exporting Natural Gas to Asia from BC s West Coast. Figure 4 and Figure 5 indicate the amount of foreign capital being invested into both the natural gas and Oilsands sectors. Total foreign and domestic investment into the Natural Gas sector is set to exceed Oil Sands investment by $20 Billion supporting roughly 53,000 new jobs in BC. 23 Figure 4. Horn River/Montney Basin Foreign Investment Figure 5. Alberta Oil Sands Foreign Investment Page 7

8 Transportation Located in the Peace River Region of Northeastern BC, Fort St. John is well connected to the province and the country. As mile 47 of the Alaska Highway (Highway 97), Fort St. John is easily accessible and linked to numerous major highways; including highway 16, 49, 2, and 1. In addition to excellent accessibility by road, Fort St. John is also connected by rail and air. With a regional airport and three rail lines moving in multiple directions, Fort St. John can be accessed all year round. With the ongoing and proposed development in the area, Fort St. John has recently attracted the attention one of Canada s largest airline carriers; West Jet. Beginning in June 2013, WestJet will commence the first daily flights in Canada with its new carrier Encore. West Jet believes that the market for flights to Fort St. John is currently undersupplied and expects the demand for flights to Fort St. John to grow significantly. 24 By offering multiple transportation options, Fort St. John is well connected. The following list showcases just some of the major companies that travel to and from Fort St. John: Greyhound Air Canada Central Mountain Air North Cariboo Air West Jet New Carrier CN Rail Cargo VIA Rail Passenger Page 8

9 Local Economies When it comes to natural resources, the Peace River Region has it all. The region contains: 38% of BC s Hydroelectric Power 90% of BC s Grain Over 10,000 Oil Wells The Peace River region has some of the largest oil and gas fields in all of North America, with over 450 billion cubic meters of marketable gas reserves already identified and an estimated 650 billion cubic meters yet to be discovered. Fort St. John welcomes approximately 200 new businesses to the city a year, almost one third of them oil and gas related 25. As BC s energy capital, Fort St. John also boasts the highest disposable income out of any city in BC, 16% above the provincial average 26.It is the oil and gas sector that really drives Fort St. John s economy. The city boasts hundreds of companies specializing in large and small pipelines, trucking, seismic research, and well site construction, which provides key support to the oil and gas industry. Fort St. John s natural gas production already exceeds the provincial demand and most of the oil and gas is being exported to markets across Canada and the United States 27. The city is pitted directly between two recently discovered tight gas fields in Northeastern BC. Both the Montney Formation to the southeast of the city, and the Horn River Basin, to the North of the City, offer exciting possibilities of population and economic growth for Fort St. John. The interests of several Canadian and US oil and gas companies have already been piqued, and the region is starting to see a huge profit from land investment in the Peace River region 28. One of the other sectors Fort St. John relies upon for a stable economy is agriculture. With over 16 million hectares of farmland, it s easy to see why. The Peace River Region produces more barley, wheat, and grass seed than any other area in BC. The North Peace Region in particular supports approximately 1,700 farms which account for a revenue of approximately $77 million a year 29. The forestry sector also plays a large role in the economy of the city. In 2009, the city was named the Forest Capital of British Columbia by the Association of BC Forest Professionals. Fort St. John s forestry industry employs over 700 people and contributes $98 million to the local economy each year 30. The timber supply surrounding Fort St. John is in excess of 4.5 million hectares, providing jobs for over 350 logging and trucking contractors 31. Page 9

10 Job Growth Employment Environment in Fort St. John Fort St. John is currently in the middle of an economic boom caused by the proposed and ongoing development of Natural Gas infrastructure in the region. As of April 2013, the city of Fort St. John reported an unemployment rate of 4.6% 32 ; however, Fort St. John city council member Trevor Bolin believes it to be even lower. In a recent article dated April 2013, Trevor was quoted saying that when you look at Fort St. John it s the land of opportunity. The amount of jobs, even the amount of help wanted ads and signs that are up and around town right The Natural Gas Sector will support roughly 53,000 jobs in BC between 2012 and Conference Board of Canada now, I would have a hard time believing that we are even 4.6 [unemployment rate percentage]. I would say we re lower than that. 33 The unemployment rate in Fort St. John BC is below the provincial average of 6.4% and well below the national average of 7.2%. 34 As the development of Natural Gas infrastructure in the region continues, the unemployment rate is expected to drop even lower as more long term jobs become available. Expected Job Growth in Northeast BC As investment increases in BC s energy sector, both the Northeast and Northwest of BC expect a significant increase in job demand. According to a Spring 2013 study by the Petroleum Human Resource Council of Canada, Natural Gas Operations in Northeast BC could create between 19,400 and 34,540 ongoing new jobs (as seen in figures 6 and 7). In addition, between 4,330 and 6,424 short term construction jobs will be created between now and In the graphs below, Figure 6 indicates the expected ongoing jobs created in Northern BC if 3 LNG facilities are constructed on BC s coast; Figure 7, shows the same information if 5 LNG facilities are constructed. Page 10

11 Figure 6 & 7 Figure 6. Natural Gas Operations Employment Outlook to 2020 Figure 7. Natural Gas Operations Employment Outlook to 2020 Page 11

12 Population Growth Job Growth = Migration = Population Growth As of 2011, the population in Fort St. John was 18,699, an increase of 5.7% persons since Fort St. John s online visitors section reports that the population today is greater than 21, The population is projected to continue to grow in support of the increasing number of jobs available in the region. Fort St. John Councilman Byron Stewart attributes the population increase to the growth of the oil and gas industry in the region. 38 As existing and proposed projects continue to move forward, workers from across BC and Canada continue to be attracted to the region. As the labor force in Northern BC is already working at maximum capacity, workers must migrate from other regions to satisfy the increased job demand. Population of Peace Region Current: 64, Forecast: 123,450 -North Peace Economic Development Commission According to the Labor Demand Outlook for BC s Natural Gas Industry, published by the Petroleum Human Resources Council of Canada, Northeast BC will need to fill 20,000 and 40,000 new jobs between now and The majority of these jobs are located in the Peace Region which currently has a population of 64,000, nearly a quarter of which is Fort St. John. As workers migrate to the region to meet the increase in job demand the population of the Peace Region is expected to double, skyrocketing the population from the low 60,000 s to upwards of 123,000 people 40. Page 12

13 Real Estate Market Housing Trends As Fort St. John continues its rapid expansion, the city will have to work hard to keep its infrastructure (both residential and commercial) on par with demand. The main driver in Fort St. John s economy is the oil and gas sector, with many workers moving from across the country to work in the region. As a result the Legislative Assembly of British Columbia recognizes housing issues that the city faces: Increasing in-migration of resource workers due to increased employment is causing an increased demand in housing and places upward pressure on prices Shifting local demographics means less housing turnover. Young people are not moving out of FSJ after high school. Seniors are staying longer and not as many are moving away Community needs more diversity of housing types and price points. Limited housing for households earning $45,000 annually Region dealing with serious labor shortages Chronic shortage of rental housing; what was a seasonal problem has become a yearround issue. Some reports of rent gouging the result of an undersupplied market Land supply may become an issue as City is hemmed in by ALR land With many workers moving to the region, Fort St. John s housing supply has been slow to keep up. In the late 80 s and early 90 s, housing starts averaged well under 100 units per year. As seen in Figure 8, Residential construction has slowly increased in the past ten years averaging 150 units per year since As the economy begins to improve, housing starts Figure 8. Housing Starts in Fort St. John: have been slow to catch up; between 2010 and 2012 the average number of new dwellings is 157 residential units. 41 Wanted: Rental Properties According to a publication by Statistics Canada, 80% of newcomers to a province will rent for the first 2 years. 42 As the number of net new migrants to the region continues to increase, the Page 13

14 demand for housing will continue to outpace the supply, causing a decrease in vacancies, an increase in rents, and an overall increase in property values. According the latest Canada Mortgage and Housing Corporation (CMHC) report, the vacancy rate as of Fall 2012 in Fort St. John for multifamily properties is at 3.6%. 43 A decrease of 2.3% since Fall Rental rates in Fort St. John are steadily increasing up 6.9% year over year as of Fall With a limited housing supply, growing population, and expanding job market, Fort St. John is one of the fastest growing real estate markets in Canada. Conclusion Through our research and analysis, Fort St. John fits the WCPG model as a high growth real estate market. With significant economic growth, job growth and population growth, as well as a favorable political climate, we believe Northeast BC, specifically Fort St. John is the best region in Canada to invest in real estate. With over $60 billion of proposed infrastructure in the region, a labor supply that already is experiencing a shortage of workers potentially causing a doubling of the population in the next decade; Fort St. John is experiencing unprecedented growth comparable to what Fort McMurray experienced between 1997 and With over 20 years of experience and 85 projects completed, WCPG has the knowledge, resources and team that will allow you to maximize the returns you make, with minimize the hassles. With more than half a billion invested, we have created a system that makes it easy for any investor to add investment real estate as a part of their portfolio. Page 14

15 Sources Government of British Columbia. (July 22, 2009). Construction underway on new Fort St. John Hospital /2009HSERV htm 3. McEwan, Tim. (April 26, 2010). How Site C will turn northern B.C. into an economic powerhouse. ml 4. BC Hydro. (2008). Peace River Site C Hydro Project. householder_may.par.0001.file.site_c_peace_river_site_c_hydro_project_householder_may.pdf. 5. Robinson, Melanie. (April 29, 2010). Real Estate, Economy to benefit if Site C project goes ahead. estate economy tobenefit if site c project goesahead&catid=10:news&itemid=12 6. CBC News. (April 19, 2010). Massive B.C. dam project approved. site c announcement peaceriver dam.html 7. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC. 8. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC. 9. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC. 10. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC. 11. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC. (accessed May 18, 2013). 12. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC. 13. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC. 14. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC. 15. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC. 16. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC. 17. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC. 18. Invest In Northeast British Columbia. "List all Projects - Invest in Northeast BC." Invest in Northeast BC Bains, Matthew. " Horn River Basin shale gas reserves exceed expectations." Northeast News Bains, Matthew. " Horn River Basin shale gas reserves exceed expectations." Northeast News.

16 "WestJet to fly out of Fort St. John Local News Dawson Creek Daily News, Dawson Creek, BC." Dawson Creek News, Events & Classifieds Dawson Creek Daily News, Dawson Creek, BC Oil and Gas Inquirer. (2006). Sounds Of Success For Energetic City. gps06.pdf 26. City of Fort St. John. (2006). Sounds Of Success For Energetic City. gps06.pdf 27. City of Fort St. John. (2009). Economic Profile Business Edge Magazine. (2008). Fort St. John Looks to Avoid Boomtown Negatives (July; Vol. 5, No. 14) City of Fort St. John. (2009). Economic Profile City of Fort St. John. (2010) Forest Capital of BC City of Fort St. John. (2009). Economic Profile " Local News Alaska Highway News, Fort St. John, BC." Fort St. John News, Events & Classifieds Alaska Highway News, Fort St. John, BC. 1/fortstjohn/northeast-thriving-with-low-unemployment 33. " Local News Alaska Highway News, Fort St. John, BC." Fort St. John News, Events & Classifieds Alaska Highway News, Fort St. John, BC. 1/fortstjohn/northeast-thriving-with-low-unemployment (accessed May 18, 2013). 34. "B.C. unemployment rate drops to 6.4% - British Columbia - CBC News." CBC.ca - Canadian News Sports Entertainment Kids Docs Radio TV "Census Profile." Census of Canada. 20St.%20John&SearchType=Begins&SearchPR=01&B1=All&Custom=&TABID=1 (accessed May 18, 2013). 37. laws. "City of Fort St. John Visitor Services." City of Fort St. John Welcome. (accessed May 18, 2013). 38. " Fresh Faces Alaska Highway News, Fort St. John, BC." Fort St. John News, Events & Classifieds Alaska Highway News, Fort St. John, BC. 1/fortstjohn/fresh-faces "Boom Town Local News Dawson Creek Daily News, Dawson Creek, BC." Dawson Creek News, Events & Classifieds Dawson Creek Daily News, Dawson Creek, BC FSJ Housing Starts. (2012). Building Inspection Report BC Stats. (July 2011). British Columbia Building Permits

17 Figures: BC stats. (2011) British Columbia Housing Starts for Urban Areas and Communities