CHANGING SUB-TERRA FIRMA

Each Cycle is Same Same, but Different.

Each Cycle brings new opportunities due to investor memory, legislative and social changes as well as changes to investment classes.

1987 Crash

Much has been spoken about Sydney’s BOOMING property prices. The median cost of a home in the nation’s economic capital is just shy of a Million BUCKS! An extraordinary amount. The cost of A Grade office space has now surpassed $1,000 per m2…

So, is it any surprise to see the Cantillon Effect in action?

Absolutely not! History warns us that this is EXACTLY what we should expect.

As we know each new cycle brings about a new twist. New Opportunities, unique to the cycle in question.

The Cantillon Effect tells us that as the cost of land increases, humans will become increasingly inventive in their quest to extract value from it.

Typically, this means building BIGGER and BIGGER!

In our Blog A Modern Twist on the Cantillon Effect(click here to read) I showed you the proposed Big Bend, set to dominate the New York skyline.

modern twist on the cantillon effect

So, while the cranes in the Sydney skyline are dominating dinner party discussions about property prices, there is movement right under their feet! Quite LITERALLY!

Not to be outdone by the Big Apple, Sydney is proposing to change, maybe not the “Sky Line”, but more the “Sub-Terra Firma”.

See Sydney’s desperate need for further lettable space has seen NSW Transport Minister Andrew Constance dust off some 6,000m2 of space in the most unusual of settings.

Sydney’s abandoned tunnels and train platforms of St James station are up for grabs.

Located about 30 metres below Hyde Park, this labyrinth of tunnels extends about a kilometre in each direction from St James Station. Originally completed C1926, the construction of additional lines was quashed when the Great Depression hit.

They have sat discarded, forgotten ever since.

PHOTO: The station tunnels are off-limits to the public. (ABC News: Taryn Southcombe)

However, Minister Constance has the defibrillator in hand and is excited at the opportunity of sparking life back into these forgotten ghost tunnels.

Soon these tunnels will be the hippest of locations for the coolest bars, restaurants, shops or an ultra-trendy art gallery.

Gone will be the seances, witchcraft and black magic rituals practiced by the secret societies who currently visit these tunnels – replaced by the trendiest looking Millennial, sipping on the coolest Negroni.

Minister Constance sees the project as visionary, a direct result of the Liberal Party’s meticulous stewardship of the NSW economy.

We know better – it’s the Cycle Stupid!

You only need to walk around Sydney to see the massive construction of NEW underground rail stations. They are literally everywhere! Sydney lays claim to Australia’s biggest public transport project.

It seems quite ironic that as Sydney is building new stations they have chosen to convert the disused St James Station into a new lifestyle asset.

It’s important that we see and understand the current cycle to take appropriate ACTION. 

Recently burgeoning land prices means that the Cantillon Effect MUST be in action. As each cycle is “Same, Same but Different”. It MUST manifest itself differently this cycle.

The unused and derelict tunnels of St James station are about to be given the kiss of life. A blank canvas smack bang in the city centre, ready for rejuvenation. Brought about by escalating land prices and explained by Richard Cantillon, the forgotten economist of the 1600’s (1680-1734)…

IMPORTANT NOTICE

Disclaimer: Any opinions or recommendations expressed here do not purport to Financial Advice but rather should be considered General Advice and does not take into account your personal needs and objectives or your financial circumstances. You should therefore consider these matters yourself before deciding whether the advice is appropriate to you and whether you should act upon it. Should Financial Advice be sought, we suggest you seek such advice from an appropriately qualified advisor. Any yields, rental income, tax rates, interest rates, depreciation rates, inflation rates Dividends per Share (DPS) and Earning Per Share (EPS) etc shown are estimates only and should not be used as a guide to future performance. Past performance is not necessarily a guide to future performance and should not be relied upon for this purpose. Authorised Representative of PGW Financial Services Pty Ltd – AFSL 384713
2018-12-19T12:48:46+11:00

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