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Life has a habit of making things seems so obvious after the fact.
The key, however, is to see these things before they become commonly known.
At least from a context of making some serious financial gains.
Today’s blog is a study of long-term vision and planning and simply discovering the sheer value of things long taken for granted.
But, as you’ll discover, it’s also far more than that.
I will detail both the thinking, the behavior and the science that ensures a repeat of the 18.6-year Real Estate Cycle is upon us. Once again.
If you have been scared off or believed the mass medias proclamations surrounding the coming recession and wholesale falls in property markets, think again.
You may find another way to see the economy and position yourself for similar gains.
Let’s begin.
Could this be the world’s richest workers’ club?
If you have read about this development already, all I can say is: you are in the minority.
You really do have to dig deep to find it.
Suffice to say, the decisions made at a board meeting in 1955 have just paid off.
And I mean paid off!
Source: AFR
After a seven-year consultation and planning period, the Workers Lifestyle Group (WLG) has received permission to develop one of the largest residential aged care facilities in Australia.
It will comprise 480 independent living units, a 160-unit residential aged care facility, two community centers, and a gym with pool and retail.
It makes you wonder if such sums could have even been conceived when, in January 1955, the first meeting of the Blacktown Workers Club Group convened.
It wasn’t so much the club, but an early decision made on behalf of members.
That decision was to purchase 55 acres of vacant land for future use.
The manifestation of such a decision was best summed up by a quote in the above article by WLG Chief Executive, Morgan Stewart (emphasis added is my own):
“That was a great legacy decision and a pure land bank. We talk about legacy. What do you want people to look back and say, ‘that was incredible, such a good plan’.”
What a quote!
Rarely have I read something that so succinctly and effortlessly sum up the best way to get rich.
I reckon the reporter who grabbed this quote didn’t even realize its significance.
Buying vacant land, and then holding it, will produce life changing wealth for the holder.
As Morgan says, it’s a good plan.
Now there is a further way to maximize again the capital gains one can “earn” by keeping large tracts of land from the market.
Use that same land to produce an enduring income.
Mr. Morgan described the project as a “win-win” because it would address the accommodation needs of the large proportion of both the club’s and Blacktown’s ageing population while helping to diversify the club’s revenue, roughly 75 per cent of which comes from gaming.
“It is very strongly revenue positive. The money we generate is reinvested back into services and products for our members. This is an extension of our income diversification,” he said
Bingo. Create half a billion dollars of capital gains from 55 acres of land and then hold a significant chunk of what’s developed as a rental income stream.
Does anything here speak to you of recession? Or land prices collapsing?
There’s something else with the above quote which caught my eye, did you see it?
It’s here; “…roughly 75 per cent of which comes from gaming.”
Just a throwaway line? Oh no dear reader, it’s the cherry on top of our land banking dessert.
You must always follow the smart money.
If you ever wanted to get more followers or likes on social media, just post something that’s negative.
That’s my experience anyway.
Particularly if its front and centre in the mass media. Take recession for example.
I recall someone post a story about traditional Return Services Leagues (RSL), which are a support organization for people who have served or are serving in the Australian Defense Force.
Apparently, memberships have been falling for the last several years. This is a shame because at least on the surface they help bankroll needed services for our veterans.
The main drawcard for these RSLs were the government granted licenses that allowed them to have vast sprawling pokie machine areas and sell over-the-counter alcohol. In Australia you need a license to do these.
Fast forward today, with people more health conscious, money tighter than ever and gambling no longer a socially acceptable hobby.
There you go, all the ammo you need to go on a social media fueled negative recessionary rant.
It may look like clutching at straws, but this is what’s out there now.
All negative, all emotional, and absolutely what you don’t need to hear.
Because I will say this, I’ve discovered the last folk worrying about their falling membership base and loss of revenue are the RSL’s themselves.
Asset-rich RSL clubs are taking advantage of the potential of their real estate in land-constrained CBDs to secure further income, with assets being redeveloped into office towers and apartment complexes.
Asset rich but cash poor, sound familiar?
The management teams here aren’t looking down into their empty wallets, instead they are looking up.
Favorable zoning laws in the CBD means these clubs can now apply and add 20-30 storeys built right on top of their establishments.
As you read this, the best located RSL club’s which are close to public transport and can take advantage of zonal rules are seeking joint ventures to redevelop.
Endeavour Property Group’s Andrew Gibbons, who is advising Chatswood RSL on the redevelopment, said it was increasingly common for landowners who weren’t traditional property players, such as clubs, churches and non-profits to turn to development for extra income.
Emphasis below is my own.
“We are definitely seeing a lot of these traditional long-term land users try to understand what they have and how that marries with their plans.
We know that tenant migration compounded with strong office leasing fundamentals, rising rents, declining incentives and low vacancy levels have created the economic conditions required to feasibly develop commercial office buildings,”
Does anything here speak to you of recession? Or land prices collapsing?
This trend has since accelerated. In Sydney’s east, Bondi Junction RSL was recently given approval for a 10-storey mixed-use building with 78 apartments above a new club and retail component.
In Kogarah, the RSL Club recently unveiled its new $80 million residential development, Veridian, while at Woolooware Bay the Cronulla Sharks Leagues Club’s master planned town centre – with retail, a hotel, commercial suites, a medical precinct and a residential development – is taking shape.
If you seek average returns from your investment journey, be average. If you want negative returns, follow what the media is telling you.
My contention is this: don’t come up to me in 2024 and say “Geez, those reports of falling land prices and recession a few years ago were way off weren’t they?”
The biggest gains are made away from the public gaze, and right now I see the smart money positioning themselves to corner the best development deals with suitable terms of credit and a well thought out plan for returns on their investment.
So, get yourself a membership to the Boom Bust Bulletin (BBB) and begin planning today.
It will teach you the history of the 18.6-year Real Estate Cycle and why precisely it continues to repeat to this very day.
And much like these RSL clubs, allow you to spot and take advantage of the opportunities such knowledge can give.
2022 will go down as one of the very last chances to position yourself and your portfolio financially to take fullest advantage of the coming peak of the current cycle later this decade.
The clues are there all around us, you simply need to ignore the noise and look when the real estate cycle says its time.
And our property clock sits right on 1pm – “the land boom”. The professionals recognise this regardless of what social media think.
Time to make it work for you today.
Sign up now.
Best wishes,
Darren J Wilson
and your Property Sharemarket Economics Team
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This content is not personal or general advice. If you are in doubt as to how to apply or even should be applying the content in this document to your own personal situation, we recommend you seek professional financial advice. Feel free to forward this email to any other person whom you think should read it.