Property boom in north dakota set to continue “for decades”
The discovery of the Bakken Formation oil field and use of new horizontal drilling technology have reinvigorated the state with the latest figures showing that GDP has increased by 120% since 2000. While much of America is struggling to fight decline, North Dakota is enjoying the country's lowest unemployment rate (3.2%) with wage rises of 80.3% in little over a decade.
Whilst the Chancellor's recent budget announcement of a 'generous' new tax regime has been designed to stimulate Britain's nascent shale gas drilling technology, the United States is already leagues ahead. The horizontal drilling techniques employed in North Dakota have transformed the American energy market and nowhere more so that North Dakota. Between 2011 and 2012 the state achieved a production increase of more than 250,000 barrels per day, making it the second highest oil-producing state in the country.
The International Energy Agency has predicted that it expects the US to be the world's top oil producer by 2020 such is the importance of the Bakken Formation. By November 2012, production from the Bakken Formation had reached almost 22 million barrels per month. With plans in place to drill around 33,000 wells over the next 15-25 years, 5,000 of which will be drilled in the next two years, the boom looks set to continue for decades. Already North Dakota is expected to generate a state surplus of $1 billion for 2013-15.
The oil boom is not without its problems though. In the past five years, North Dakota's population has increased by 7.2%, putting pressure on local resources - accommodation in particular. With more oil workers arriving every day the situation is growing ever more acute. Single-room apartments in the towns at the Centre of the boom are already commanding up to $2,000 per month in rent. Workers who cannot find accommodation, despite having the money to pay such steep prices, are forced to sleep in their cars.
As a result, a string of developers and companies have been developing purpose-built accommodation in the last 12 months to meet demand. Property Horizons offers purpose built mini-hotels for single workers and now plans to create a “high quality hotel” in the town of Dickinson.
Robert Gavin, Director and Founding Partner of unique worldwide investment company Property Horizons, explains: "Demand for single family homes to serve the Bakken Formation is increasing hugely. Oil workers' families are keen to follow their loved ones to North Dakota, but the desperate accommodation shortage means that there is simply nowhere for them to live. Property Horizons is tackling the problem head on by offering 174 single family homes in Williston, each on its own one acre plot at Horizons Ridge. The homes will be designed as a community environment, with the land's original features - such as the 100+ year old school house - retained during the construction."
The properties will include three and four bedroom homes, each with two to three bathrooms, a double or triple garage and basement. Each property will have an internal area of 1,400-2,000 square feet.
The homes will sell from $270,000 for a three bed/two bath property. The larger four bed/three bath properties with additional add-ons will be priced at around $350,000. Many will be sold to residential buyers, but some will also be available as buy to let opportunities, with predicted rental returns of 13-15% for corporate tenancies. With financing available, the leveraged cash on cash yields based on net rental profit as a function of the down payment will be around 50-60%.
Drilling for investment gold?
Find out more information about buy-to-let property in North Dakota:
http://www.themovechannel.com/property/details/6624119/