March 16, 2017 | Joel Schlesinger
Faster, Stronger, Higher... Prices?
As Calgary considers a bid for the 2026 Olympics, it will likely find no stronger booster than the city's real estate industry
The prospect of hosting another Olympics is undoubtedly creating a lot of a buzz in Calgary and the city has no bigger booster of the cause than its real estate industry.
The City officially announced last month that an exploratory committee (www.shouldcalgarybid.com) is investigating whether Calgary should bid to host the 2026 Winter Olympic and Paralympic Games.
While there's no guarantee the City will actually go through with it, hosting the Winter Games for a second time could be a boon for Calgary's real estate market.
Look no further for evidence than the past two Olympic Games held in Canada, says Dr. Harry Hiller, a University of Calgary professor who studies the impact of the Olympics on host cities.
Following the 2010 Vancouver games and the 1988 Calgary games, real estate prices in both cities surged, based on MLS® System data.
"In a nutshell, what it amounts to is this: if you improve property that is devalued because of some factor – either because of some kind of pollution, contamination or housing that is decrepit," it will have a positive impact on surrounding properties, he said.
Cities hosting the games, Hiller adds, are often better able to attract the significant public funding necessary to rehabilitate parcels of land, which otherwise would be difficult to develop. And, in turn, they can then construct important social infrastructure – like sports venues – that often provide long-term community benefits.
Hiller points to the Olympic village in Vancouver as a great example.
If you're building a new arena, for example, the property within a block or two will automatically be revalued upward
"It has transformed what used to be a contaminated site along the water front and made it beautiful," he said.
"All the neighbouring property become more desirable too."
Certainly Vancouver real estate prices overall soared in the years following. Prior to 2010, prices were somewhat depressed after the fallout of the 2008/2009 financial crisis that put downward pressure on real estate globally.
After the games, however, the average price of a home went from about $575,000 in March 2010 to $586,000 the same month a year later. Prices have steadily risen every year since with the exception of 2013.
However, it's difficult to attribute the rise in price wholly to an Olympic bump, says Jyoti Gondek, the director of the Westman Centre for Real Estate Studies at the Haskayne School of Business at the University of Calgary.
Low interest rates have helped drive prices too, but hosting the games certainly "raises the profile of a host city on a global stage," she said.
Looking back to 1988, CREB® data shows sales reached a record $1.39 billion. Total sales volume also increased year-over-year by 16 per cent, and then another 33 per cent in 1989.
The average price for a home in 1988 reached more than $100,000, an eight per cent increase over 1987. The year following the games prices jumped another 12.5 per cent.
While prices in the decade afterward moved up only marginally, the beneficial legacy of the games is still palpable today, says Scott Hutcheson, the chair of WinSport.
"WinSport is a legacy left over from the 1988 Olympics," he said, referring to the organization charged with managing many of the sports venues from the past games.
Many venues remain the nation's leading facilities for their respective sports. Moreover they have attracted high performance athletes, coaches and other professionals from around the globe.
"So the impact of an Olympics is massive to the community," said Hutcheson, also executive chairman of Aspen Properties, which deals in downtown office real estate in the city.
Still hosting the games can be a doubled-edged sword.
"If you're building a new arena, for example, the property within a block or two will automatically be revalued upward," he said. "But its construction is not a good thing if you're displaced to make room for the arena."
That's what happened with construction of the Scotiabank Saddledome – the centrepiece venue of the 1988 Winter Olympics.
"People who lived in East Victoria Park when the Saddledome was built, and were then displaced, obviously didn't feel like it was a good thing," he said.
Yet Hiller adds the games are undeniably good for the city's reputation.
"They mega events serve in what we call place marketing – making the city better known around the world," he said.
In 1988, the world was introduced to Calgary in all its glory. Arguably this opportunity may have played a pivotal role in the city's rapid growth in the decades to follow.
What is certain, however, is that hosting the games brought Calgarians together.
"As cliché as that sounds, the Calgary Olympics were so successful because we had the community spirit and unparalleled volunteering to pull it off," she said, adding that these somewhat intangible qualities shouldn't be underestimated.
"One of the toughest things to do is quantify the value the games bring to the city because if we only measure value by dollars and cents, we're missing the other side of the story."
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