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“I get richer with every passing day because I capture some of those benefits.”
– Don Riley, “Taken for a Ride”, page 2.
Don Riley bought a redundant electrical factory in London, just near London bridge, south side of the Thames, in 1979.
It was an area of the city almost nobody wanted to live in back in those days.
Source – flashbak
As Don said: “I had to drag people by the scruff of the neck to view the offices and become my tenants”.
And then, in 1993 the UK government announced it was extending the Jubilee underground tube line. Right underneath the properties Don happened to own.
Suddenly, everyone wanted a piece of London Bridge and the surrounding land area.
And that’s when Don’s own ‘gravy train’ started.
As luck would have it – for us at least – Don set about to measure the uplift in not only his own, but the entire surrounding land of each new tube station along the new extension.
He did that to a circular limit of 1000 yards. (Approx. 915 metres)
What did he find?
In Don’s own words:
“The unfolding story revealed an astonishing process of enrichment for the lucky owners of land…
…First, I investigated all areas thoroughly within a 400-yard radius (4,500,000 ft.²) around each station.
Drawing on valuations around my sites, and other properties, I made conservative estimates of the increases in land values. I was able to draw upon local experience and the data that I accumulated over the previous 20 years because of my trades in properties.
In addition, of course, I consulted the trade press and discussed land values with other property owners and estate agents”.
Does this analysis of the effect infrastructure projects have had on the UK property market interest you?
Check out our archives page here and see what Property Sharemarket Economics (PSE) Director Akhil Patel had to say on STV news about UK home prices.
Don discovered that the gains being achieved in the immediate vicinity of each station were averaging approximately £100 per sq. foot.
Going 400 to 800 yards out (or approx. 730 metres), the gains averaged about half that: £50 per sq ft.
Don then suggested that if the ten tube stations between Waterloo and Stratford were included all together, then the accumulated land price gains from building the Jubilee line extension amounted to some £13 billion. (The line cost ‘only’ £3.5 billion to build.)
So, the answer to the question I put to you above “Rentier or Renter. Which one are you” becomes obvious.
If you rent all your life, you’re going to die poor.
You may think this sounds harsh, but the numbers don’t lie.
The system we inhabit is against you if you solely rent and DON’T own some land yourself. Anywhere.
My recent Boom Bust Bulletin (BBB) issue took up this subject. It’s something I strongly urge you sign up to.
It’ll teach you the history of the 18.6-year real estate cycle, why it repeats and will help guide you to the opportunities as they present. All at the right time.
You simply must understand how infrastructure improvements are – in the end – always captured by the land.
Speaking of land, here is a picture of what the improvements at London station (near where Don Riley brought his factory) look like now.
Source – Railway-Technology Website
If you want in, then you need to read this month’s BBB issue. And we’ll tell you how to get your share.
Join us on this journey. Get yourself educated. All for a mere few cups of coffees a year.
Incredible value.
Best wishes,
Darren J Wilson
and your Property Sharemarket Economics Team
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