Welcome to 2021, happy new year everyone.
I trust you had a relaxing and fulfilling Xmas break, ready for the new year.
I drove with my family up to Queensland’s capital city Brisbane for the holidays.
A chance to visit family and friends denied us during the myriad of COVID lockdowns in 2020.
Personally, I tried to switch my brain off from the ongoing Property Sharemarket Economics (PSE) team’s work during 2020 and approach 2021 with a fresh and rested mindset.
Old habits die hard it seems.
Although I tried, I couldn’t help but place my real estate cycle lenses on.
Many years of viewing the world this way has taught me to see what’s hidden in plain sight.
And during these holidays, the city of Brisbane seemed to be saying an awful lot about what may be coming.
And potentially some trends to monitor. I always find it an interesting exercise to undertake.
So, we will break this down over two emails.
My aim here is to provide you some idea of how incredibly useful it is to look at the world through the real estate cycle.
How you can do it yourself and lastly how it can benefit you.
But first, some holiday snaps!
Source – Author
This is a photo from our master bedroom, 69 floors up the Brisbane Skytower.
It overlooks the Brisbane river, with Southbank parklands across the other side looking west.
The cranes you can see on the eastern side of the river are for the brand new casino being built. Right up along the river bank.
Source – Author
This is a photo from one of the kids bedrooms. Can you see the large tower still under construction in the background?
This will, once finished, be the tallest residential tower in the city.
It will accomplish this by being a single story taller than the tower I took these photos from; Brisbane’s current tallest residential tower “Skyrise”.
Nice view I’m sure you’d agree.
But what most people upon first viewing don’t, or can’t, see is what clues these two photos are indicating for this city.
And proof the real estate cycle is turning like clockwork before our very eyes.
The Property Sharemarket Economics (PSE) team study the 18.6-year Real Estate Cycle, 14 years up and 4 down with a mid-cycle recession (MCR) interrupting the 14 years’ expansion.
We have shown our members that we are right in the middle of the mid-cycle recession of the current real estate cycle.
We have gone to great lengths to explain that whilst economies and stock markets around the world will remain volatile, the worst is over for the land market.
Not that it fell much during the last 12 months, if at all.
So, take another look at the first photo.
Can you see the tall tower on the left? It’s the Cbus Super tower.
Cbus Super has built this from members funds itself using its own construction company.
It leases it to the Queensland government.
A very effective way to generate a return for its members using their own funds.
Cbus is outside the top 10 when it comes to size by capitalization. That tells me there are enormous amounts sitting with these super funds waiting to be deployed.
Will this signify a trend, within Australia, of more Super funds buying lots and constructing developments themselves to generate returns for investors?
This is more a thought exercise than anything.
But with investors keen to get a decent return on their capital and real estate as an investment class being seen, yet again, as “safe as houses”, you could easily imagine a scenario where significant members’ funds are directed into the land market.
The PSE team will watch and report to members should this trend develop. It could be a key clue to determine the timing of the boom and eventual bust of the current cycle.
Here is something more profound though. And it’s applicable anywhere around the world.
This is very much tied to the cycle.
You can see the under construction tower in the second photo, yes?
We know it’s due to become the tallest residential tower in the CBD.
By a single floor!
Makes me wonder about the vanity involved in some of these projects but I digress.
Here’s the point.
See, Brisbane city council currently have strict height restrictions for developments within the CBD.
This is predicated upon ensuring the safety of flight corridors above the city.
When we stayed there, I counted less than half a dozen flights a day which passed overhead as they entered finals to land at Brisbane airport.
In normal times, that number will explode. Both entering and leaving Brisbane airspace.
So you see, the developer of this latest tall tower has no remit to build higher than they have.
And in Brisbane, each new development is desperately trying to build as close to the riverbank as possible (noting also that the river does often break its banks and flood!).
See the location of the currently in construction casino in photo 1.
There is a severe lack of available land on this side of the river. Due to multiple reasons. And it’s some of the most expensive too.
That land continues to increase in price. The only way that future developments can be economically viable is to build higher. This enables access to the credit required to build.
So, that is that then. The imposed limits on height means the end of land speculation in Brisbane right?
Not so fast.
I did some digging (I know, I was supposed to be on holidays).
And found something extremely interesting, and for someone like me exposed to previous real estate cycles, totally what one should expect at this time in the cycle.
I will talk about that in the next blog and share something with you that will really show the advantage you can possess.
And how you can use this knowledge to re-look at your own surroundings.
The opportunities for life changing wealth are all around you, hiding in plain sight.
To develop a similar mindset, to know how and where to start looking for clues to the cycle and the potential for great wealth generation it can provide, you can to subscribe to the Boom Bust Bulletin.
As a member of the Boom Bust Bulletin. You will receive the history of the 18.6-year Real Estate Cycle, why it repeats, and how you can take full advantage for yourself and your family.
You will find the information this bulletin provides you nowhere else.
It is 100% exclusive to Property Sharemarket Economics.
And it will cost you less than a single coffee per month. Incredible value.
Join us on this journey.
Sign up now.
Best wishes
Darren J Wilson
and your Property Sharemarket Economics Team
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