Alberta: Canada's energy province shows no signs of stopping just yet
By
|
04/11/2009 8:00:00 AM
|
0
comments
The most striking thing about Calgary is the multitude of cranes towering over the downtown core. It comes as no surprise that a city of a million people would have cranes building new buildings in it, but Calgary has so many that almost any view granted from the touristy Calgary tower has at least one in it somewhere.
The best part about that though? Almost every one of them is moving. Despite media reports that the province's economy has been crippled, the business of growing is still, well, growing. While the province may have hit a lull (what province, or country for that matter, hasn't?), Alberta is still being driven by oil to new heights.
Perhaps it's appropriate, then, that one of the skyscrapers currently under construction in Calgary is "the Bow," formally known as the Encana Tower, where Canada's second largest natural gas producer's head office will be situated. This 1.7 million sq. ft. office building is slated to be the tallest office building in Calgary, and more importantly to Albertans, it will cast a shadow on its neighbour, the former Petro Canada Centre (now Suncor Energy Centre) and everything the former crown corporation represented. Locals even used to refer to the building as Red Square, a bitter, communism-infused reference to former Prime Minister Trudeau's introduction of the federal gas company.
The Alberta correction
Celebrity economist Benjamin Tal, who was a keynote speaker at the Alberta Mortgage Brokers 34th annual conference, drew on the strength of the province to paint a positive economic picture. Eastern Canada is going to have a rough time because it is tied to the U.S. economy, he said, but because Alberta (as well as B.C.) is tied to resources, it's linked with China, and it's going to be the first to get out of the recession.
Demand for commodities is going to grow and keep the province moving along. As proof, he said, more immigrants are moving to Alberta rather than the old mainstays of Toronto and Vancouver. The best part is that it's not just city centres like Calgary, Red Deer and Edmonton that are receiving the influx of immigrants, but smaller rural communities as well. That was contrary to a recent RBC report that said Alberta has yet to show much progress towards a recovery (the report cited a 13-year high jobless rate and revised its GDP forecast down to -2.8 per cent from -2.5 per cent). But even then, it still forecast that all of the 10 provinces will expand in 2010, with Western Canada leading the way.
Tal predicted that Canada is going to see a three to five per cent growth in 2010, but Alberta is going to be closer to eight per cent. Bold words, but also exactly what this year's delegates wanted to hear. The remainder of the event, which CMP attended, was generally positive, upbeat and celebratory. A few brokers did, however, comment on the less festive atmosphere compared to conferences one and two years ago ("We used to live like rock stars," one said. "Even the vendors had booze in their booths"), but that goes without saying. It's well known that the province enjoyed a period of unprecedented growth, then went through what most call a "correction," which is a nice way of saying the boom is over.
"I'm not going to say boom to bust, but up until mid-2008 it would almost be classified as a boom," says Mark Pullin, president and broker at Cedar Peaks Mortgage services in Calgary. "From mid '08 into basically three, four months ago we certainly saw a decline in property values and an overabundance of financing on developing land, so the developers got caught with a lot of inventory that they couldn't sell."
He quickly adds, however, that "Calgary's commercial downtown market is back as strong as ever," saying that the same (generally) applies for most major city centres in the province.
"There is no stoppage of guys putting up condos and mixed-use commercial buildings." Kirk Bacon, director, industry standards, Real Estate Council of Alberta, agrees, saying that "the last three or four months have certainly turned around. But it's good because there needed to be an adjustment - the pace it was at and the way things were going wasn't good for anybody."
He says that the fast-paced growth actually made it hard for people to do their business.
"You were competing on every house with multiple offers," he says. "That wasn't good for buyers, not for the industry, and I think the industry has welcomed the slower pace where they can provide proper guidance and service to their clients."
Rich Spence, regional sales manager for Alberta and the Prairies at Filogix, adds that he still sees a lot of money in Alberta, even if the economy and the price of oil are down, it just takes an experienced broker to tap into it.
"There are a lot of people that have money in the Alberta market and they're buying things. You're finding that Alberta is doing better in terms of sales and in terms of production than a lot of other jurisdictions. Alberta has still been really strong.
"But in the last couple of years a lot of agents jumped into Alberta when the market was really high and in another month most of the licences won't renew," he says. "A lot of people will be leaving. They don't have the experience, they don't have the marketing, the business plan, the long-term relationships or the database, and they can't stay in it while it's a little quiet."
In other words, the big producers that have always done well are still doing well and will continue to do so. As for the new guys, more measures are on the near horizon to help them adjust to writing mortgages in the new Alberta economy.
School's in
Alberta's provincial broker association has also been taking a proactive approach to improving its situation by providing a much-needed update to its education.
"We've been working on re-writing the broker course for five years," says Mike Cameron, president, Axiom Mortgages. "We [AMBA] finally have the resources with Julia [Lee] and her assistant Samantha [Gill], so we have someone on it full time. I think that's important."
Lee, the AMBA education co-ordinator, who CMP caught up with on the trade show floor, has certainly had her hands full, as AMBA has undertaken the re-writing of the entire MALP (mortgage associates licensing program).
"The biggest change is that the current licensing course is going to be split into two," she says. "It will be more fluid, scaffolded (sic), more comprehensive, more interactive and more student-centred."
The first phase will focus on the legislative aspect of brokering, while the second phase will be more hands-on and focus on the practical skills related to mortgage brokering.
"We are emphasizing the need for application and practice so learners have an opportunity to do the doing while still in the comfort and safety of the learning environment," she says.
Essentially, students will be able to apply the legislative aspects they learn in the first phase in real-life situations during the second. The other change to the course is that certain topics (specifics weren't available yet) will also be created/enhanced in order to reflect the "ever-evolving nature of the economy and industry."
Brokers who already have licences will also be required to complete new, mandatory courses designed by RECA in order to renew.
Regulation changes
On a similar note of seeking improvements, Alberta is also going through some regulatory changes. While it's still up in the air whether or not they are in fact for the best (actually, many delegates CMP asked were uncertain about the implications at all), the changes have already started to take place, as of Sept. 28.
The changes concern anyone dealing in syndicated mortgages. While they have always been regulated by RECA, the Alberta Securities Commission (ASC) had an exemption in place for mortgage broker industry members who were already licensed with RECA.
"They [ASC] have removed the exemption for registration filing requirements for people dealing in syndicated mortgages," says Bacon. "So if you've been dealing with syndicated mortgages, without that exemption they will be regulated both by RECA and the securities commission."
If anything, it seems to make the process of dealing in syndicated mortgages more riddled with bureaucratic red tape, which can either be perceived in a negative light, or how Ron Prefontaine, president of Prefontaine Financial, a private lender, sees it:
"It means more compliance," he says. "But we're looking forward to that because it will get rid of a bunch of the jokers and part-time amateurs. It will be better for everybody in the industry and better for the consumer as well.
"The implications aren't all fleshed out yet. We just know there's going to be changes and nobody really knows what those changes are yet. We'll just role with it."
According to Prefontaine it will not affect access to funds unless people stop syndicating mortgages or stop running their mortgage investment corporations.
So while Alberta continues to weather the economic slump, it seems to be coming out of its low point and everyone is planning for business as usual - albeit with a few changes.
"Perhaps lenders may retire, but right now there is still a lot of selection," says Prefontaine, adding that "Alberta has high immigration, the market is rebounding, there is a low absorption rate and we have a balanced market. It's a great industry with a lot of good deals, a lot of money to be made and a lot of opportunity. It all smells good stuff for Alberta."
AMBA Conference Highlights
The 2009 Hollywood-themed AMBA conference, "a night at the AMBAs," was a big success for all the organizers and delegates. Here are some of the highlights of the event:
- CIBC economist Benjamin Tal, at a morning keynote address, said Alberta is going to lead the pack out of this recession based on its resource-heavy industry and relationships with China.
- The new board of directors was sworn in and include: Todd Fralic, president, Frank Hickey, past president, Dean Koeller, treasurer, and directors Gay Andrews, Indra Bains Ladha, Paul Bojakli, Kristen Linde, Pat Kelly Phil McDowell, David McKitrick and Renee Stribbell.
- Four awards, chosen by the board, were handed out at the black-tie gala. Ed Dooley received the lifetime achievement award, Gary Siegle, from Invis, received the president award, Brian Gentles, from Home n Work Mortgages received the ambassador award and Karen Blomquist, from Mortgage Intelligence received the executive award.