Real Estate in 2025

By John Miller

Thinking outside the box and changing the way we see real estate investment, that's what john miller offers us with his bestseller real estate in 2025 / investing differently. Based on an in-depth and documented analysis of the real estate sector, combined with more than 25 years of experience in this field, the author shares with us his vision of the future. - changes to be expected in real estate. - growth segments and those to avoid. - real estate investment that pays off. In this new edition, a chapter on taxation has been added. Another novelty: the 10 criteria to consider when buying land for those who wish to invest in this niche of the future. An essential book for current investors and those who are thinking of becoming one.

• Language: English
• Publisher: Miller
• Release date: Dec 22, 2022
• ISBN: 9798215429600

Book preview

INTRODUCTION

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You hold in your hands my fifth book, a revised and expanded edition, dealing with my favorite subject: real estate! The challenge in this book was that I ventured off the well-marked path of how-to guides to express my vision of what the future holds for our world from the perspective, of course, of the real estate investor. As the authors of the book Le Monde en 2025 mentioned , [...] forecasting is not a luxury, it is an obligation of our time¹ .

The global economy is struggling to recover. The Chinese locomotive has slowed, which has led to a drop in demand, and therefore in commodity prices. Canada is directly affected, but despite everything, a balanced budget is expected for 2015. In Quebec, austerity prevails, in order to honor our collective profession of faith and achieve a zero deficit with the 2015-2016 budget. . Increased pressure at the municipal level.

According to Terry Corcoran of the Financial Post , in 2010 the federal and provincial governments projected that by 2015 they would have accumulated a combined debt of $1 trillion, which amounted to $30,000 per Canadian resident² . The debt was higher by 100 billion, which represents $31,850 per citizen in Canada and $38,725 for each Quebecer³ .

Multinationals close their doors or go bankrupt. Workers fear losing their jobs, and retirees their pension funds... if they haven't already. How can we not see that the tectonic plates of finance and the economy are colliding?

Several major trends are currently taking shape on a global scale. They will combine to create opportunities in several areas, including, of course, real estate. At the same time, certain real estate niches, market segments, will be losing momentum, or even to be avoided. Among these trends, let us first mention population growth. The increase in population and the change in the way of life of more and more people exert pressure on the environment and contribute to the depletion of water, arable land and energy resources. To meet energy needs, water is needed. More and more arable land is destined for the production of biofuels, which contributes to the increase in the cost of foodstuffs. All these changes accentuate the phenomenon of global warming, which in turn increases the shortages of drinking water as well as the loss of arable land due to drought and desertification. All of this will transform the world of real estate in a way never seen before.

If we consider the fact that, on the one hand, the world population is increasing and that the change in lifestyle of the inhabitants of developing countries requires more space per person and that, on the other hand, the planet is losing every year hundreds of thousands of hectares of land due to desertification, pollution, etc., the equation becomes obvious. The demand for space exceeds the supply. We must now completely change the way we see real estate investing. It will be necessary to abandon the vertical mode − apartment buildings and office towers − and consider horizontal real estate, expanse, land, in short, space! This awareness being made, you will find at the end of this book a new chapter in which I define 10 criteria for selecting a site so that you can profitably put into practice the content of this book. In addition, Soluce's team of tax experts in Trois-Rivières has written a chapter on real estate taxation, which sheds useful light on this essential aspect of real estate.

The projections very rarely follow a perfectly linear trajectory. My analysis does not take into account the technological advances that are sure to occur or any international agreements that the various governments could be obliged to conclude in the face of imminent planetary catastrophes. I provide avenues for reflection that you can, if you wish, explore or deepen.

"It is better to adapt to it immediately: the crisis has given rise to a new financial universe which is a game-changer for investors⁴ . » Will real estate still be a good investment in the coming years? This is a question that I invite you to examine with me in this book.

CHAPTER 1

THE TRANSFORMATION OF THE REAL ESTATE WORLD

Our planet is experiencing major demographic, economic, financial and climatic changes. In this first chapter, I offer you an overview of these transformations that have already begun, their interrelationships and the major impacts that will result from them and that will transform the world... of real estate.

A GROWING IMBALANCE BETWEEN GLOBAL SPACE SUPPLY AND DEMAND

Human beings, regardless of their nationality, must feed, clothe and house themselves. Meeting each of these three universal basic needs, for each of the 7.3 billion people on our planet, requires space. Between 1950 and 2000, the world population doubled⁵ . Every day on earth are added about 39,000 people⁶ whose needs require space. This state of affairs favors an ever-increasing demand for land. For its part, the offer, the habitable, cultivable and usable surface of the planet, is clearly defined, therefore limited. The Earth is very small... We must absolutely realize that – since we cannot create a second planet Earth, nor enlarge its circumference – the supply of space that we all have is known, limited. In addition to not being able to be increased, the latter is constantly reduced, year after year, by numerous factors that we will analyze in the following pages.

THE GLOBAL SPACE SUPPLY IS LIMITED AND SHRINKING

Earth, our planet, has a definite surface area. In this sense, Jim Rogers, a world-renowned financier, in an interview given to Doan Bui, journalist at Le Nouvel Observateur⁷ , said: "It is the rule of supply and demand. The problem is that there are not enough raw materials (land, water, oil, grain, ore, etc.) for the whole planet. The imbalance between an ever-increasing demand for space and a limited and shrinking supply will create real estate threats and opportunities. Based on this fact, in the following pages, I will first present to you the seven manifestations that reduce the space available to humanity. We will then see the factors that create the increase in demand.

The water

Since this evidence of a shortage of resources often eludes us in our part of the world which is marked by abundance and wide-open spaces, I have undertaken the following exercise. I first wondered what is the limit of the offer. The answer, which of course represents the total area of the planet, is 510,067,420 km ² ⁸ . This unimaginable number is in a way the tree that hides the forest.

Here's why. Using the principle of the funnel, from largest to smallest, we must subtract from this total area the area occupied by the seas. These cover 71% of the planet. Salt water alone therefore reduces the supply of space by more than two-thirds! In square kilometres, sea water therefore occupies 362,147,868 km² (510,067,420 × 71%). This leaves us only 147,919,551 km ² of land [510,067,420 × (100% – 71%)] to house us, produce our food and exploit the soil to extract all the raw materials necessary for manufacturing. of our clothes and everything we consume.

INDUSTRIALIZATION, URBANIZATION AND POLLUTION

Pollution due to human activity makes entire territories unsuitable for life. Industrial development, the industrialization of agriculture, and the expected population explosion in the next cycle will destroy even more space. By 2025, China's urban population will be over 800 million people. During the Beijing Olympics, we were treated to a glimpse of what awaits these overcrowded cities, when pollution is already reaching alarming levels.

China's economic growth is taking place at the expense of the environment, which is becoming an additional threat to social order. It is estimated that in 2030 the costs of health problems resulting directly from pollution could represent up to 15% of China's gross domestic product (GDP)⁹ . The accumulation of different gases in the sky of certain regions of India and southern Asia forms gigantic clouds of brownish smog, and this, for three or four months a year.¹⁰ . Can you imagine living in these conditions? Why then would these people accept it, especially once they have reached a level of education and income allowing them to live and work abroad, in regions of the planet where the quality of the environment is better?

As a result of its rapid industrialization and accompanying urban sprawl, China is losing 950,000 hectares¹¹ of arable land each year. According to an article in L'Actualité in June 2008, [...] in 2006, urban areas, most often built where the soil was most fertile, covered 400,000 km ² in the world. And they are growing by 20,000 km2 per year, according to the United Nations Environment Program (UNEP)¹² . Added to this is the loss of 20,000 to 50,000 km ² of soil due to the acceleration of natural erosion which has doubled, due to human activities¹³ ".

In 2008, according to the International Energy Agency (IEA), China became the country emitting the most greenhouse gases (GHGs), overtaking the United States.¹⁴ . It is even estimated that at an annual economic growth rate of 10%, in 2030, the GHGs emitted annually by the Middle Kingdom will represent double the total emissions of all industrialized countries! It would make anyone want to emigrate!

The term environmental refugee was first used in the mid-1980s. In my opinion, however, it will be in the next two decades that it will be popularized, entering our colloquial vocabulary on the same level as attack terrorist or collateral damage. We also speak of eco-refugees or climate refugees. According to an expert on environmental refugees, a discipline I didn't know existed until recently, the number could reach 250 million by 2050¹⁵ . Other sources even speak of half a billion¹⁶ .

In terms of the minimum space needed to meet the basic needs of these people, we can then speak of 450 million hectares (250 million × 1.8 ha) to 900 million hectares (500 million × 1.8 ha ). This last estimate is, by my calculations, about the size of Canada!

The difference between earth and...soil

The planet is mostly (71%) covered in salt water. The rest, 29% of its surface, is dry land or the space we have. But this supply of space is still limited due to the fact that arable land represents only 22% of this solid area, or 32,542,301 km ² (147,919,551 km ² × 22%); the rest is not suitable for cultivation because it is too cold there or because the soil is uneven, arid, infertile, etc.

In reality, fertile soils are rare. In Quebec, arable land does not even represent 3% of the territory (45,000 km ² ), compared to 7% in Ontario¹⁷ . Around 60% of the most accessible and productive arable land around the globe is already cultivated. In some parts of the world such as South Asia, the proportion of cultivated arable land even reaches 94%¹⁸ . Suffice to say that, in the most populated regions, the maximum capacity for soil exploitation has already been reached!

Global warming

The global warming of the planet is now part, after much turmoil and criticism, of the accepted and recognized facts... except for the climatoseptics. Specifically, in 2008, the average temperature recorded around the globe was 0.49°C higher than the average for the entire past 100 years¹⁹.²⁰ . As of this writing, the first 10 months of 2014, according to the US Oceanic and Atmospheric Agency (NOAA), have each been the hottest on record on the planet since temperature records began in 1880.²¹ . Oceanographer and president of the St. Lawrence Global Observatory, Serge Demers, says: This proves that the predictive models we used in the past were not adequate: everything is going faster than expected.²² . Mary Glackin, US Deputy Undersecretary for Oceans and Atmosphere, agrees: The changes we expected are actually happening faster than we thought.²³ "

Another indicator of this acceleration of global warming comes from the Arctic. Considered the current warming sentinel, the Arctic sea ice is melting at a rate that exceeds the scenarios of the most pessimistic climate models, according to Louis Fortier, researcher at Laval University. The latter predicts the complete disappearance of the Arctic sea ice during the summer, and this, from the horizon 2015-2018, a phenomenon that the experts initially predicted for... 2070²⁴ !

A certain form of resignation sets in. The authors of The World in 2025 even go so far as to state: "Whatever policy initiatives are adopted, rising temperatures seem inevitable in the long term.²⁵ . In short, the climate of our planet is warming up more quickly than expected and the magnitude of the phenomenon leaves some people speechless. Several consequences linked to this warming have already begun to affect the world. Here are some impacts on real estate.

Consequence 1: rising sea levels reduce the supply of space

A consequence of global warming is the rise in sea level. Gradually, this will lead to land loss along the coastlines. This will reduce the supply of space. Already, islands are disappearing or are seriously threatened. This is the case, for example, on the side of the Indian Ocean: the Maldives and part of Indonesia are certainly part of the territories destined to disappear. Moreover, in January 2009, L'Actualité had dealt with this disaster. Here is an excerpt from the article:

"The inhabitants of the Maldives Islands, in the Indian Ocean, will have to resolve to leave their corner of paradise. If the level of the oceans rises, as predicted by climate specialists, the 12,000 atolls that make up this archipelago will be swallowed up before the end of the century. Mohamed Nasheed, president of this small country of 385,000 inhabitants, has however created a special fund intended to buy land in India or Sri Lanka to rehouse the Maldivians. A test for mankind. So far, no country has managed to settle all of its population elsewhere without degenerating into conflict.²⁶ . »

Another article adds: "Floods and rising sea levels could threaten the lowlands and impoverish the soil, which in turn could lead to mass migration, especially from Bangladesh to India.²⁷ . »

Closer to home, the Îles-de-la-Madeleine are also affected. In February 2014, in a civil security report, we could read that currently, 68% of the coasts of the Magdalen Islands are eroding.²⁸ .

Consequence 2: coastal regions will be threatened by the force of storms, which will also reduce the supply of space

Already in January 2009, in an article in the newspaper Les Affaires dealing with the state of the world in 2025, we could read: "Finally, climate change and its procession of natural disasters will be more than ever a threat to coastal populations, without talk about the growing economic costs that will result²⁹ . »

Compiled data confirms that between 1995 and 2005 the number of storms in the Atlantic doubled³⁰ . Financial losses amounted to 145 and 200 billion US dollars³¹ . Hurricane Katrina alone caused, on August 29, 2005, between 90 and 100 billion³² dollars in damage and, above all, the displacement of tens of thousands of people, many of whom will never return. Consequence: decrease in demand in New Orleans and increase in population and real estate values in Texas, the neighboring state.

Seeing how quickly global warming is happening, experts say 'tangible manifestations' of it are expected to materialize in North America before 2020³³ . This message, which is not new, is struggling to get across. I believe this is partly explained by