How Super-Fast Transport Could Someday Obliterate Your Property Portfolio
Check out this video of a proposed tube transport system that could travel over 1200km per hour, faster than the speed of sound.
This super-fast transportation is the brainchild of entrepreneur Elon Musk, cofounder of Paypal and founder of Tesla and SpaceX. Musk has described it as a “cross between a Concorde, a rail gun and an air hockey table.” He envisions it being “a non-scheduled service which leaves when you arrive, is immune to the weather and never crashes.”
Dirk Ahlborn, CEO of Musk’s Hyperloop Transportation Technologies (HTT), shares more: “Imagine a capsule with 28 people that’s hovering inside a tube at really high speeds… it’s completely solar-powered, it’s cheaper to build than current high-speed train technology, and it’s earthquake-stable.”
If it was anyone else, I’d be tempted to say they’re full of crap. But Musk has founded not one, but two billion dollar companies. Dirk Ahlborn is also the CEO and co-founder of Jumpstarter Inc., a successful crowdsourcing technology company.
They’ve recently signed an agreement to begin construction next year on a fully functional urban Hyperloop in Quay Valley, California. They’re investing $100 million in this project and hope to complete it by 2018.
They’re not mucking around.
If his short-term Hyperloop dream becomes a reality, people could travel from Los Angeles to San Francisco with a $30 ticket in as little as 35 minutes.
Imagine Melbourne to Sydney in under 45 minutes, without pre-scheduling, without the delays and hassles of airports – and for a fraction of today’s costs.
The longer-term vision includes every major city with mini-loops that can transport passengers to larger stations, where they can then travel to other large regional stations throughout the country. It sounds like Australia’s current public transport system, just faster – ridiculously faster.
Musk has even gone on record saying he envisions a future where trains can whisk us from Los Angeles to New York, or in our case, Perth to Sydney, in 45 minutes. Beijing or London would be a two-to-four hour commute.
How Could This Technology Impact Property Values?
Because we’re property investors, let’s think for a moment what this type of technology in Australia would mean for our real estate values.
What if you could commute from Albury to Melbourne in 15 minutes? What if you could live in Port Macquarie and travel to work in Sydney in just 20 minutes? What if Rockhampton to Brisbane could be journeyed in half an hour?
To appreciate the impact of such technology, we must understand What Makes Real Estate Valuable. You can follow the link to read what I recently wrote on the topic.
To summarise, the value of any asset comes down to human emotion, driven by two basic factors: desire and scarcity, or to use economic terms, demand and supply. Real estate is desirable because people need space to occupy.
But the degree to which real estate has value is determined by scarcity, or the supply of the asset. In other words, the rarer something is, generally the more valuable it is.
Steve McKnight teaches in From 0 to 260+ Properties in Seven Years that there are six different types of scarcity:
- Lifestyle and Convenience
- Potential Investment Return
- Planning and Zoning Restrictions
- Density
- Dwelling Style or Appeal
- Land Size
Sydney, Melbourne, Brisbane, Perth, Adelaide and Darwin are the most expensive places to live in Australia because of scarcity factor number one – lifestyle and convenience. The CBD of your city is where the greatest concentration of jobs is found, and people want to live close to where they work.
Proximity to work is essentially determined by the speed of our transportation system. If “living close” to work is no longer 5 or 15km, but rather 500km, suddenly proximity takes on an entirely different meaning.
Suddenly, you could live virtually anywhere in the country you want to live, and continue working wherever it is that you want to work. Suddenly, travel time to your job is no longer a factor in the value of real estate.
What Would the Impact Be in Terms of Property Values?
This technology would completely obliterate capital city property values as we know them today. Unless other lifestyle factors came into play, properties in Sydney and Melbourne could become no more valuable than properties in Ballarat, Ipswich or Bathurst.
As investors, it’s important for us to understand the scarcity factors we so strongly rely upon today as sources of value for our assets, may not continue to be drivers of value in the future.
How far off are we from seeing the Hyperloop or a similar technology in Australia? 10 years? 20 years? That’s anyone’s guess.
Of course, the Hyperloop could tank, but I think it’s important to recognise that technological advances in transport are inevitable. In fact, they may be closer than we once thought.
While you needn’t put your capital city properties up for sale just yet, bear in mind that the day may be approaching.
What Do You Think?
Is ultra high-speed transport a “pipe dream” in Australia (pardon the pun)? If it does become a reality, what other factors would make the capital cities attractive places to live? What would the impact on property values in regional areas be? If you could live anywhere in Australia and keep your job, where would you go?
Take a moment and leave your thoughts in the comment section below.
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Fast internet is also having a similar effect.
Indeed. I talk to people in Albury-Wodonga regularly who like myself work remotely for companies in Sydney and Melbourne.
I’ve never understood why the federal/state governments aren’t trying to relive Melboure/Sydney property issues by implementing development of regional centers eg Nowra/Bathurst/Newcastle etc
I think this is a great topic that will happen regardless. It may not be this exact system or plan but technology and new breakthroughs are going to completely alter the future of property and the way we value and the way others value goods and services.
What a great concept. Solar powered, fast, smooth and crowd funded with no political self interest. I think this is more than a revolutionary transport system but faster access to medical facilities and possibly decentralisation of major services (if it garners support). In other words less congestion of our large cities and a demographic move towards liveable regions. So long as the transport system will support large volumes of commuter’s. And why not include freight in a similar system to free up our roads and reduce the ricks of fatalities. I confess my bias towards the regions as I live and work in country WA. All the best for the future Elon and Dirk.
Thanks Jason for your article. Perhaps the other possibility is that instead of capital city prices declining, property values in areas served by such a transport system could increase? There have been many technological and productivity innovations over the last several hundred years. When the railroads in America were rolled out, nearby land prices skyrocketed. Fast internet is similar. People are not paying less for land because it is in a location with high-speed brodband – they are paying more. The productivity and technology innovations eventually capitalise into the land price. The land always takes the gain.