Saskatoon will emerge as one of the strongest performing commercial markets in Western Canada in the years to come, according to a new report.
A Saskatoon economic report published by the Real Estate Investment Network (REIN) turns the spotlight on The City of Bridge’s diverse economy. Saskatchewan’s largest city has managed to rebound from market downturn thanks to a recovering energy market and bourgeoning real estate activity. According to REIN’s report, 60 per cent of the city’s GDP comes from service sector – primarily, real estate and mining and petroleum product.
“Since early 2016, oil prices have been on a steady incline, with 2017 and 2018 forecasts showing oil production rebounding at 4.5 per cent and three per cent respectively,” the report states. “The province’s nine per cent growth in exports in 2017 is also expected to be led by the energy sector. This is great news for an economy that’s heavily reliant on oil as oil prices are one of its key economic drivers.”
The oil recession caused a slight, one-percent decrease in Saskatoon’s GDP during 2016, according to RBC Royal Bank. However, the city’s GDP and employment prospects are looking up. Saskatoon’s GDP is expected to increase 1.8 per cent in 2017 and 2.3 per cent in 2018.
“(Economic diversity) has also helped cushion the housing and commercial real estate market from dramatic downturns that have been witnessed in other Western Canadian cities, which has proven positive for real estate investors and home owners in Saskatoon,” said Don R. Campbell, senior analyst for REIN.
The finance, insurance and retail estate industries account accounted for 14.6 per cent of the city’s GDP in 2015 – the second-highest producing sectors for the year. Still, Campbell expresses caution in investing in real estate as the market experiences slowdown as the energy market begins to recover.
“For investors, they must be even more pro-active in the management of their portfolios during these next couple of years,” said Campbell.
Presently, Saskatoon is experiencing a uniquely buyer-friendly real estate market. Overbuilding and oil prices have slowed down the market for sales, but offer homebuyers and investors more options and negotiating power.
“Despite the oversaturated market, properties are still selling for 97.2 per cent of their asking prices which is incredible considering market conditions. This is likely the effects of the major Canadian real estate boom that we are in the midst of,” the report states.
As the energy market begins to pick up, the job market is expected adapt according, albeit gradually. The unemployment rate sat at 8.1 per cent in June 2016, up 2.2 per cent from last year. The oil recession will continue to reverberate through the job market into 2017, with RBC Royal Bank estimating an unemployment increase in 2017, eventually leading to a decrease in 2018.