Expert Advice with John Lindeman: 13/06/2018.
President Trump recently announced that he wants to send astronauts to the Moon and build a lunar base as part of a re-invigorated USA space program. But, does the USA own the Moon? A friend of mine thinks someone does and actually bought some land there. She told me about her purchase.
Bursting with excitement, she said, ‘John, I just bought ten hectares of land for each of my five grandchildren!’
‘How very thoughtful – what did that set you back?’ I asked.
‘Just $20 a hectare, and each block has unbelievable views!’
‘Wow! Where did you find such a fantastic investment?’
‘On the Moon.’ she replied.
It was true. She showed me the title deeds she had received from the vendor, a company called Lunar Embassy detailing the exact location of each grandchild’s plot of lunar land.
‘They’re certainly very innovative property marketers.’ I said.
‘What an ideal gift for my grandchildren, as one day, who knows how much moon land could be worth!’
The need to own land is rooted is rooted in our past – when we ceased being Stone Age hunters and settled into farming communities. The control of land enabled us to house, feed and raise families in peace. Land ownership is synonymous with security and this explains why property is fundamentally different to other forms of investment- you can buy shares, savings, bonds or commodities without any guarantee of a return, but as long as there are people, property will have value.
The lunar land venture shows us that this concept is so deeply rooted in our psyche that people will even buy land on the Moon – but buying land on the Moon is not about the potential value of Moon land, it is about whether the Lunar Embassy has any right to sell any of it.
The value of land is dependent on two basics – who owns it and what can be done with it. Nevertheless, it would be suicidal for you to assess a property’s potential by looking at only those two fundamentals. Along with opportunity comes risk, so always be sure to check any potential property purchase for the sorts of things that many investors miss:
• What is the area’s fire and flood history?
• What is the location of planned freeways, airports, flight corridors and railways?
• What is the current local land use zoning and are there any overlays?
• Are there any easements, caveats and other encumbrances to the title?
• Have improvements made on the property complied with council regulations?
• Is the property serviced by town water, power, gas and sewerage?
• What developments are proposed for the area?
Of course, if you buy a block of land on the Moon, none of these will ever matter!
John Lindeman is widely respected as one of Australia's leading property market analysts, authors and commentators.
Visit Lindeman Reports for more information.
He has well over fifteen years’ experience researching the nature and dynamics of the housing market at major data analysts.
John’s monthly column on housing market research featured in Australian Property Investor Magazine for over five years. He is a regular contributor to Your Investment Property Magazine and other property investment publications and e-newsletters such as Kevin Turners Real Estate Talk, Michael Yardney’s Property Update and Alan Kohler’s Eureka Report.
John also authored the landmark books for property investors, Mastering the Australian Housing Market, and Unlocking the Property Market, both published by Wileys.
To read more articles by John Lindeman, click here
Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.
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