Is Calgary’s boom back? Consumer confidence seen climbing ‘with a vengeance’
CALGARY – From BMWs to Bentleys to a good bottle of wine, Calgary consumers are opening their wallets in what’s being described as more than just a recovering economy – with some even willing to say the word “boom” again.
Retailer Wayne Henuset is in the thick of it, discovering his own barometer to measure what is quickly turning into a healthier marketplace.
The owner of Willow Park Wines and Spirits says consumer confidence has been rising “with a vengeance” since fall.
“We know this because when things are bad, people just buy wine, on sale, and bring it home.
“But when times are good, the restaurants are buying more wine from us, because people are going out more. And that’s what’s happening.”
It’s one of myriad examples that suggest Calgary is reclaiming its economic swagger, as sectors across the board enjoy a surge in consumer and investment confidence, including high-end retail, real estate, construction and, most importantly, oil and gas.
Henuset adds that during the 2008-09 recession, reduced prices and spot sales were what brought customers in.
“Now they’re not really paying attention to that as much, they’re just buying whenever,” Henuset said, adding that the pricier, highend bottles are also getting bought up more.
According to the BMO Blue Book report released this week, Alberta is expected to lead the country in real GDP growth by next year as the province’s economy starts humming again.
Real GDP is expected to expand 3.6 per cent this year before moderating to 3.4 per cent by 2012, according to BMO Capital Markets.
In Calgary, recent reports have suggested record leasing activity in the downtown office market last year, with experts saying job growth isn’t far behind.
Meanwhile, job growth has already started in the construction industry with construction giant Ledcor launching a massive recruitment campaign, with plans to hire up to 9,000 people this year in Alberta and other parts of Western Canada.
In the energy sector, industry activity is way up, says oil and gas analyst Peter Linder, with drilling activity significantly on the rise, record land sales and job prospects improving.
Alberta Energy reported this week it had sold oil and gas leases or licences on 271,000 hectares of land worth $842 million, including a whopping $107 million for a 7,900-hectare licence near Red Deer.
“All of that means more activity in the energy industry, and that means much more jobs,” said Linder.
“In fact, I think we’re on the cusp of another significant labour shortage, another boom.”
Even the lower natural gas prices that have been a hurdle in recent years will start to recover, Linder predicts.
“The second half of this year will be far, far better than the last three years.”
Ben Brunnen, chief economist with the Calgary Chamber of Commerce, explains that as oil prices recover, Calgary’s oil and gas sector is enjoying increased activity and investment confidence.
As of March 2011, 59 oilsands projects valued at nearly $100 billion were either planned or already underway in Alberta.
“And when investment is good, incomes increase here. That’s a unique perspective for Calgary because we are the head office of oil and gas,” Brunnen said.
Businesses seem to already be reaping the rewards of more disposable income.
Justin Havre, a realtor with CIR Realty, says Calgary’s real estate market is bouncing back, particularly in the luxury home market with 44 homes sold for over $1 million in Calgary alone last month.
“The luxury market is becoming really active, and it’s usually a good indicator that there’s some confidence in our economy and in Calgary investment.”
Tony Dilawri, who runs several car dealerships including Calgary BMW and the Distinctive Collection, which sells Bentleys and Aston Martins, says the luxury car market has also improved from last year.
“We’re finding consumer confidence is definitely up as people become a little more willing to spend money on their vehicles.”
BMW sales are up 20 per cent from last year, Dilawri said, adding that some 20 new and pre-owned Bentleys and Aston Martins were delivered to customers last month. Dilawri says the Calgary kind of wealth is on its way back, a swagger that’s proud, but not too boastful. Calgary is not like Montreal and Toronto, he said, filled with old money that isn’t always affected by economic shifts.
“We’re young in Alberta, and we work hard for our wealth,” he said.
“So when we get it back, we want to have some fun. We don’t want to boast, but we want to reward ourselves.”
Brunnen agreed Calgary’s economy is bouncing back, but consumers are still cautious.
“The investment is there, and the consumer confidence will come with it.”
While optimism is growing in Calgary, however, the economic mood elsewhere is guarded. Reuters reported last week the global economy is still in flux, with investors wary that the real stresses still lie ahead. European debt uncertainties and the arrest of the head of the International Monetary Fund mixed with Arab revolt and Japan’s recovery from natural disaster are all contributors.
“It is clear that some investors have decided that they need to take some risk off the table, but they do not want to take too much off,” said Andrew Milligan, head of global strategy at Standard Life Investments.