Saskatoon rides commodity boom

When Harry Janzen is not selling houses he tries to find time to get to the gym. But the executive officer of the Saskatoon Region Association of Realtors is losing a little conditioning this year since he has been kept busy selling more than twice as many houses as he did last year - leaving little time for exercise. That is because Saskatoon, the largest city in the province of Saskatchewan, is experiencing its biggest economic boom in more than a generation. With almost 50 per cent of the agricultural land in Canada, the province is profiting in a big way from the 100 per cent rise in global wheat prices during the past 12 months. Being the leading global supplier both of potash - which is used for fertiliser - and uranium to the world markets, sky-high commodity prices are a massive boon to Saskatchewan's regional economy. The boom story is translating into population growth. For the first time in more than 10 years, more people are moving to the province than leaving. Most of them are coming back from Alberta, where the rapid expansion of the oil patch has rendered life for many unaffordable. Others are simply cashing in on record-high housing prices in Calgary and going back to invest in cheap Saskatchewan property. At slightly more than C$250,000 (HK$1.96 million), median house prices in Saskatoon are still 33 per cent below the national average. Saskatoon might now attract interest from Asian buyers on a similar scale as in Vancouver or Calgary. Typically, in Canada's largest and most prominent luxury developments 20 per cent to 30 per cent of buyers are from Asia. In Vancouver, Singapore-based Delta Group reports strong interest from Korean investors interested in its restoration of the historic Georgia Hotel. For the Shangri-La tower in Toronto, the latest landmark project in Canada's financial capital, the biggest foreign investor group after locals - who take up roughly 50 per cent of the luxury condominiums in the upper part of the hotel and residential tower - are buyers from Asia, with 25 per cent of the deals. The red-hot economy in Saskatoon created an additional 1,100 jobs in August. The phones of Saskatoon property agents are ringing off the hook. Most single-family homes were sold within 10 days, Mr Janzen said, and after fierce bidding battles some sold for 20 per cent more than the asking price. Median prices for detached houses have risen by more than 60 per cent since the beginning of the year and the inventory of unsold houses has halved during that time. Down on the banks of the Saskatchewan River, which runs through the city centre, construction workers are building River Landing, a massive mixed-use complex with flats, offices, shops, cafes and a promenade. Meanwhile, in the city's 23rd Street the former Bay department store has been converted into condos, and a hotel complex opposite the Bay building has been transformed into an office tower. Many warehouses that were built during the first boom in the early 20th century are now targets for loft conversions. Shaun Dyck, an economist with the Regional Economic Development Authority, has counted 215 company start-ups this year alone. But the boom has not trickled through to the broader commercial real estate market. Saskatoon's vacancy rate of 5 per cent is way above established boom towns in western Canada such as Calgary and Vancouver. 'This is about to change; commercial space is getting more scarce now,' said Tom McClocklin, a partner with Colliers McClocklin in Saskatoon. Office vacancies had already reached a 20-year low, but five million square feet had still not been leased out in Saskatoon, he said. However, this will not take long to remedy. For this year, Mr Dyck is expecting 4.7 per cent GDP growth in Saskatoon, twice the national average. The growth story in Canada's prairie is starting to make headlines way beyond provincial borders. Mr Janzen has received calls from investors as far away as Britain and Australia. The Conference Board of Canada, an independent economic think tank, is forecasting higher growth this year in Saskatoon than even in Canada's oil capital, Calgary. In April, the Foreign Direct Investment magazine, published by the Financial Times group, ranked Saskatoon among the 10 most promising small cities in North America in its 'City of the Future' competition. Nevertheless, Saskatoon mayor Donald Atchison believes the city is still 'a pretty well-kept secret'. Mr Atchison is happy that the rising inward migration and the economic boom have so far not produced the kind of traffic congestion that weighs on other Canadian growth cities. The taxi ride from the airport to the CBD - always a good measure of congestion - takes just 13 minutes.