Desjardins analyst Jeff Roberts says a new housing forecast from Canada Mortgage and Housing Corp. for the Alberta market bodes well for developers in the province.
Mr. Roberts said in a report:
Reflecting recently increased CMHC single-family housing forecasts for major Alberta cities in 2009 and 2010, significantly improved affordability in these markets and increasing lot sales, we believe Melcor Developments Ltd. (GM:MODVF) and Genesis Land Development Corp. (GM:GNLAF), two Alberta-focused land developers, are good buys.
CMHC is now calling for 3,000 new single family homes in Calgary in 2009 and 4,000 next year — a 33% jump in the forecast from a few months ago. Edmonton single family home construction is expected to jump to 2,650 after CMHC previously predicted 2,000. Next year, the forecast jumps to 3,200 in Edmonton from a previous call of 2,600.
Mr. Roberts noted lot sales for Melcor and Genesis have been stronger in the last few months and he expects that will continue as the market improves.
On the apartment rental side, Mr. Roberts noted CMHC has not made major changes to its forecast but predicts the strong Alberta economy should help boost the bottom lines at Mainstreet Equities Inc. and Boardwalk Real Estate Investment Trust (OTCPK:BOWFF).
Mr. Roberts said:
We expect that higher average energy prices and more confirmed energy projects should continue to generate healthy immigration to Western Canada, especially Alberta which should help boost occupancy Boardwalk and Mainstreet’s Alberta portfolios.