Recently, I was shown the most stunning news article I’ve seen for a while – showing you exactly how to benefit from the cycle!
You see the other day, Alice, a Calnan Flack Investment Club Member sent me a fantastic link to an article on news.com.au that I think you all should have a look at!
Famed economist David Ricardo told us that as a society, when we become more productive and hence more profitable, land with locational advantages would become more and more desirable resulting in the price being bid up sky high.
Back in his day, he was referencing fertile agricultural land against sterile barren lands. You just need to visualise rich green pastures with abundant warmth and water compared to land on a backdrop of a dry desert landscape or a harsh arctic environment.
You see productivity is the key.
Henry George also wrote about this concept in his bestselling book “Progress and Poverty”. During the 1880’s and 1890’s this book was only outsold world-wide by one book – the Bible!
Amongst other things, George wrote about how a civilization develops. First a lonely pioneer settles and toils on their lonesome. Life is hard and they are not particularly productive with few facilities and little infrastructure or population to leverage. Soon more family’s join our initial pioneer and quickly there is a level of scalability where specialist tools, skills and services can be provided. When manual labour is required the many hands now make light work.
As you can imagine our scattered settlers houses with abundant space and land are starting to resemble a small township. Soon a general store appears, a post office, pub, bank and internet cafe congregate in a small main street. The buildings are practical but small. The abundant land that surrounds them provide ample free parking for the locals.
As the population grows schools appear, jobs flourish and other social outlets appear. A sports facility appears as does a community hall and shopping centre complete with movie cinema and other social attractions.
By now land is becoming more sort after and the abundant space that previously surrounded the commercial properties on the main street is now well and truly built upon. Towering apartment and office blocks fitted with the latest of technology cast shadows over the coffee culture and trendy shopping precinct that has appeared below at street level.
The cost of land is astronomical and developers do not have any choice but to build higher and higher amortising the cost over as much floor space as they can.
Living standards have improved as society becomes more and more specialised. Land and the skills of the work force are both put to the most productive value. Industrial land once meters from the GPO has now been pushed miles away from the city centre.
The story of our city reflects the growth that all cities undertake. It explains why major cities are so often built on the most fertile of soils – because this was the land with the highest locational advantage available to the original settlers. Cities do not just appear randomly, they appear with purpose.
Think about it?
Why was your city built where it is? What locational advantage does it have? Deep port? Fertile lands. On a river? On a trade route or maybe it was a railway town.
And that brings me back to the article I was kindly sent by Alice – the title of the article explains exactly what it’s about.
“Aerial photos show the stunning transformation of Australia’s top 10 fastest growing regions”
These stunning Before and After photos show the relentless expansion and development that is currently underway. Have a look, some of them are fantastic!
This cycle is well underway. Opportunity is upon us. Understanding how a city develops within the context of the cycle places us in a very privileged place enabling us to make better investment decisions.
At Calnan Flack we are experts in the practical investment application of the economic drivers. Speak to us now to understand how we can help you leverage your investment returns this cycle.
Source – news.com.au “Aerial photos show the stunning transformation of Australia’s top 10 fastest growing regions” 8th August 2017 by Charis Chang