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Now, I have been accused of many things in my life.
My wife has a book on them as matter of fact.
However, one thing I cannot be accused of is not following the advice I give, both to those who seek it and otherwise!
This picks up straight from a theme I spoke about to you all last week (see here).
So, I can tell you straight up when I read a recent article you should be able to predict what I did next.
The article concerned one of the best performing sectors in the world economy.
As soon as I finished reading it, I went straight to my software and brought up a chart.
I would like to share this research with you today.
But first, a question; do you know what the best performing real estate asset was in 2020?
And do you know why exactly this same asset class can continue to outperform for the rest of this decade?
Because if you have a 5–10-year mindset with your investments you absolutely need to be across this sector. There is so much more profit to be made here.
Read on, and I will explain to you what it is.
How COVID made this the best performing sector in the world economy
So, what is the best performing sector in the world economy?
If you guessed “data centers”, you’re spot on. But it’s not the tech that is the key here; it’s the land/real estate.
The research I read was from a newsletter specializing in commercial real estate.
According to their stated research, Asia Pacific data centre traffic doubled in 2020, reaching an all-time high.
This jump was driven by a pandemic-led surge in demand for video conferencing, online schooling, entertainment, social networking, and platforms to support remote working – spurring requirements for data storage, computing, and networking over the course of 2020.
Singapore and Sydney registered the strongest demand, closely followed by Tokyo.
Most demand originated from cloud providers, gaming, over-the-top media services, online content, and streaming providers.
Other major demand drivers include global technology services companies, and financial sector firms.
So, this explains the outperformance of this sector in 2020, but what about the future?
Has this opportunity passed us by?
Or is this more like the start of a multi-year growth market?
Well, in terms of answering this, consider the following.
The report reveals that digital transformation is generating demand for data centre capacity beyond traditional data centre markets.
Data centre operators are seeking expansionary opportunities in other cities.
Demand in emerging markets such as mainland China, India and Indonesia also continues to gain momentum.
So, this means more rush to secure the best locations to build up capacity.
Which makes all this a real estate play!
Recall also there is a COVID related construction delays for these too.
Then consider the further digitization of government and health services as both embrace the reality of co-location workers who spend time working from home.
So that’s the hype so to speak. But the truth is, as always, what the charts say to us. So, let’s look.
Place your trust in the charts.
The report mentioned a few international hubs like Singapore, Sydney, Tokyo etc.
Sounds like a good place to begin your research to me.
Source – Yahoo finance
Above is a Year-to-date chart for Ascendas Real Estate Investment Trust (REIT) based on the Singapore stock exchange (SI – A17U).
Below is a similar chart for Mapletree logistics trust (SI – M44U) also listed in Singapore.
Source – Yahoo finance
They are both year to date, as I’m not too bothered by what they “did” in the past, more about what the market sees in their future.
Typical of this type of stock, the price sees a large drop in mid-March 2021.
Being REIT’s, they are mandated to pay most of their earnings as dividends. When these are paid to shareholders, the stock price must drop.
However, they both then rebound strongly back towards their yearly highs.
If the stock price hit’s and then exceeds these yearly highs, that would warrant further attention as the market foresees future increased earnings.
And that’s what we as investors want to capture.
Both companies are increasing their footprint in data centers, not just in Singapore but around the world too. This strategy has resulted in them both being identified as some of the best performing Singapore REITS in 2020.
And explains why this is a story more about land than data IF you use the real estate cycle lense to look at this.
Source – Yahoo
This chart belongs to NextDC (ASX – NXT) an Australian based stock exposed to data centers here in Australia.
Again, similar with its Singapore cousins, it sees a price drop when it goes ex-dividend. But there is once again another rebound from those lows.
Again, watch for a breakout above yearly highs, it indicates rising earnings and a reason for you to be on the right side of the trend.
These companies, and many like them, are very well poised to outperform with ever rising earnings and dividends during the next decade.
This is because they are vital to the continuing digitalization of the world economy and the impending wireless revolution that 5G promises.
And right now, below key highs, this could prove an astute time to place them on your watchlists.
And then wait until the right technical setups appear which will guide us to an ideal time and price to buy in.
And then hold a minimum five years into the peak of the cycle, at least in my opinion.
Would you know what those key levels are though? Or the correct technical set up to watch for and the ones to avoid?
Even more important than that; did you realize exactly “why” this is all about land, and what it is saying about the 18.6-year Real Estate Cycle?
Because I believe we can help you out if there are doubts about any of those questions.
And that’s via a membership to the Boom Bust Bulletin.
It’s designed to give you what you need to know about the history of the 18.6-year Real Estate Cycle, why it repeats and how to maximize the opportunities this knowledge will provide.
Recent editions have covered the charts of similar technology exposed stocks and showed members how to use a few simple, easy to use technical set-ups to buy them at the right time and right price.
And how understanding the land question can lead you to these opportunities in the first place.
And all this for a few cups’ worth of coffee a year, amazing value!
So don’t wait, sign up now.
These REITS are providing us with a small window to make a good long-term entry that you can profit from in the long term.
Let us help guide you on this journey.
Sign up now now.
Best wishes
Darren J Wilson
and your Property Sharemarket Economics Team
P.S – Find us on Twitter under the username @PropertySharem1
P.S.S – Go to our Facebook Page and follow us for right up to date information on the 18.6-year Real Estate Cycle.