Alaska: Finding the Next Big Real Estate Boom for Your Investments
There is nothing quite like viewing the Northern Lights from Alaska’s national parks. Being able to sit back and enjoy a meal of freshly caught King Crab or watching a dog sledding race while sipping on hot cocoa are dream delights of consumers all over the world.
Now, those once-in-a-lifetime experiences may be easier to attain, as over 28 million acres of natural, resource-rich lands in Alaska could be opened for future development. This land is currently under the management of the BLM (U.S. Bureau of Land Management) and is designated for mining, oil, and gas development.
Let’s examine this incredible new opportunity and what it can mean for investors seeking to diversify their real estate portfolios.
Why is Alaska Happening?
In 1971, the Alaska Native Claims Settlement Act levied protections around what is known as “D-1” lands. This is the same territory where over 5,000 miles of pristine salmon streams and habitats for the largest caribou herds exist.
The change in designation started under the Trump Administration and is currently backed by both Alaskan U.S. Senators. There is some pushback from a coalition of conservation groups and tribes, but the demand for development is reaching a massive peak due to the need for state revenue and job availability.
As the Trump Administration was leaving, then-Interior Secretary David Bernhardt signed the revocation orders, but these were put on pause by the Biden Administration due to concerns about legal errors and public input. That is why the BLM hosted over 14 meetings around the state to get more insight.
Since then, the pressure to lift the ban has been massive. Extrication organizations like mining and oil companies are chomping at the bit to get into Alaska. The only genuine concern from a legal standpoint is federal control. As long as you have backing from an American organization or are individual investors and U.S. citizens, you are likely to have a much easier time getting your hands on this fantastic opportunity compared to others.
What Does This Mean?
There are environmental concerns about the release of over 28 million acres of land in Alaska. This land is full of unique ecosystems and species that are worth protecting. However, there must be a balance between the land’s natural resources and humanity’s ability to develop further infrastructure.
This land, or at least a significant portion, will likely be opened for development. No matter which administration is likely to win the 2024 presidential election, the demand for economic growth in the state is at an all-time high. The mining and logging sectors are anticipating an 8.7% growth in job demand, and Alaskan Governor Dunleavy recently announced that most state jobs will not require a four-year college degree.
The point is that the state is preparing for a surge of new workers as mining, oil, and gas companies begin to develop this new land. They are anticipating the changeover.
What About Real Estate?
There is still good news if you are not currently involved in extraction services. This new development will require commercial properties, residential homes, and other support services. Investing in setting up a corner store or an apartment complex for workers is a good interest exercise.
Even then, given the massive size of the proposed development area, you could also make an argument for resorts, touring companies, and other luxury services that offer an adventure and comfortable experience to clients worldwide.
Alaska currently ranks third on the 2023 State Business Tax Climate Index. This is a very good area for new development and investment because of its business-friendly tax policy. They want outside business—they just prefer it be from U.S. investors (or at least treaty-friendly countries).
Public comments on the proposed release closed on February 14, 2024, but there is still a lot of debate between conservation groups, local tribes, local governments, and federal oversight. This will be a heavily investment-charged situation to monitor and well worth the potential investment return for anyone interested in the beauty and magnitude of the Alaskan outdoors.