How will President-elect Donald Trump’s Presidency Impact Western Canada

Many wealthy individuals are “shocked” by the results of the US presidential election,

including the CEO of Starbucks, Amazon billionaire Jeff Bezos, and others. Many investors

in the stock market appeared to bet against a Trump win. However, now that the uncertainty

is over, what are the dynamics that accredited real estate investors and family offices

should be looking for and how might new regulations and trends impact the landscape in

Western Canada?

Until we see the actual results that the new administration can accomplish, much is still

speculative. However, President-Elect Trump clearly lists his priorities on his new website

GreatAgain.gov, and investment legends like CIO and fund manager Ray Dalio have written

that they are sure some major reversals are coming. This may include inflation, higher

interest rates, more aggressive lending practices and over $500 billion in infrastructure

investment.

Western Canada’s Economic Recalibration

It’s no secret that Western Canada has had some economic challenges recently. The fall in

oil prices, the stalled Keystone XL pipeline plan, its resulting impact on the housing market,

and the exit of some older businesses have all be a part of this.

However, rather than seeing the decline of commerce in major Albertan cities like

Edmonton and Calgary, we appear to be going through more of a calibration or pivot, as

these economies are continuing to evolve. Both the Calgary Herald and the Financial Post

have continued to report on the boom in new startup activity and some predict that 2017

could finally be the year of the Canadian startup IPO, as many of these new tech ventures

begin to mature.

The fallout of the US presidential election and the displeasure of American based tech

firms should be good for Western Canada as well. We are currently seeing Uber move into

Calgary and a stronger US dollar could make expanding in Canada more profitable to a

wide range of high-tech firms in the upcoming months. This is all good news for local

commercial real estate, as more commerce and more demand for office and retail space will

certainly benefit landlords.

Energy & Interest Rates

Some of Canada’s oil and gas companies have already announced increased capital

spending plans for 2017 by as much as 70%. This is likely in response to the expectation

that Trump will fast track the approval of the Keystone XL pipeline. However, higher interest

rates could hamper some corporations and investment types across the board. In particular,

higher rates may impact large publicly traded REITs, and even more so those which have

been relying on the residential rental market in the United States.

In reaction to these trends we could see more family offices and sophisticated individual

investors moving more of their portfolios over to direct investments or investing through

smaller private partnerships in commercial real estate. Yield may become less of a

challenge in some respects if there is a new higher inflation environment, although the

savviest investors will continue to seek value-add and growth investments as now is the

time to find these ripe opportunities in Western Canada.

Summary

While we may still be in the transitional phase of the new White House administration,

intelligent investors are already quickly looking to adjust their portfolios to best benefit from

the changes ahead. With many dynamics in play that could benefit Western Canada, this

might be prime time to investigate valuable acquisition opportunities before the best gains

are eaten up.