My number one hot market watch list city hit the news before I was able to fully broadcast my research. But, nonetheless, Kitimat still makes my future hot spot for real estate investing, due to the proposed and much talked about LNG project.
What it’s all about:
LNG Canada is in the midst of planning the buildout of a $40-billion dollar liquefied natural gas facility in Kitimat. I have heard from Kitimat locals that LNG will confirm the go-ahead by October 1st of this year. News reports have all been very optimistic that the project will move forward. The project will bring in approximately 3,000 workers.
How this will possibly play out:
There has already been activity happening in the Kitimat real estate market due to the enthusiastic chatter that the LNG project is looking optimistic. There are currently 48 property listings on the MLS, ranging from $76,000 to $1.9mil.
We can forecast what could happen in the Kitimat real estate market based on what happened when Rio Tinto’s modernization project was in development back in 2011/2012. In 2011 the average value of a home in Kitimat was $170,416. Once the Rio Tinto project was in place, the average soared to $281,067 in 2012. That’s a 65% increase in just a one-year period. The average rental rate had also skyrocketed as there were approximately 3,000 workers for the smelter upgrade, all of which required a home while completing the project. In 2014, the rental rate for a home started at $2,100 (according to the city’s rental stats) which was more than triple the rate before the project started.
Will there be the same demand for rental properties during the potential LNG project? In my opinion, the rental market will not command the same increase in rental prices because LNG will set up housing for workers in work camps. However, the rental market will certainly increase for future workers that are relocating with their family, as the family will require a home for themselves.
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