A hundred years ago, in 1900, the Western World was essentially an agrarian society. In the United States, for instance, a significant proportion of the population worked on the land, producing 80% of the food consumed (the deficit was imported from abroad). By the year 2000, only 4% of the population worked on the land, producing more than 120% of the food consumed (the surplus is now exported).
The change that permitted a mass exodus from the land (rural living) to cities (urban living) was mechanisation and automation. A tractor could plow as much in a day as 100 men with oxen or horses. Refrigerated trucks and ships enabled the transportation of food to new markets where previously that food would have spoiled en route. “Crop-duster” airplanes for aerial spraying and fertilising could achieve in an hour what would have taken a week, one hundred years ago.
Every operation became much more efficient, eliminating the time-consuming human component. Of course, the people no longer required to work the land were not relegated to the unemployed heap. On the contrary, vast armies of workers were required to design, prototype, commercialise, manufacture, assemble, test, deliver, install, service and maintain millions of tractors, trucks and airplanes, to name but a few of the manufactured goods that typify the move away from an agrarian society.
And so there was a slow but consistent shift in populations away from the rural sector to cities where manufacturing was concentrated. Some cities were so dominated by one or two main industries that they are still associated with that industry, such as Detroit with cars, Pittsburg with steel, Hollywood with movies, Blackpool with coal, Mt Isa with mining, Zurich with finance, and Milan with fashion.
Note that people didn’t just drift from the land to end up congregating in these places, and then spontaneously decided to start an industry there, such as making cars in Detroit. Rather, the (initially) nascent industries attracted workers from the land as employment opportunities rose in the new industries while they fell on the land.
In other words, part of the reason why cities grew the way they did in the 20th century is that the dominant industries were hungry for more and more workers, who had to live near their place of employment.
However, the world is changing once again. All the industries which required armies of workers during the last century are themselves being automated and mechanised. Assembly plants now exist that are entirely run by robots. Financial trading houses that once had hundreds of brokers running around and interacting with scraps of paper, shouts, hand signals, and other cues, now are entirely computerised. Movies have been produced entirely inside computers, and trains exist that are fully automated and do not even have a driver.
In addition to this phenomenal wave of automation, communications technology (epitomised by the internet) has permitted both incredible mobility (you can call the office on your mobile phone while driving to the ski-field) and an incredible stay-at-home power (you can video conference for two hours with co-workers from around the world instead of having to each spend 4 days travelling to meet each other).
And here is the point. The reason why people came together to live in big, sprawling cities (which, as a result, became overcrowded, polluted, crime-infested, and short on resources such as water and open spaces) has disappeared. No longer do the masses need to live on each others’ doorsteps, so to speak. No longer do we have to congregate within an easy commute of our places of work. For increasing proportions of the population, through the judicious use of communications technology, we have the freedom to live where we want.
Just hold this thought, for a moment: we have the freedom to live where we want. And now go back to your childhood, and try to think of where everyone wanted to go to for their summer vacations. Nine out of ten friends and acquaintances that I have asked this question answer: “To the beach!” or “To the seaside!”. All of the holiday resorts from my memory were at the beach: Schreveningen in Holland, Kortrijk-aan-Zee in Belgium, St Tropez in France, Brighton in England, New Brighton and Sumner in New Zealand, and the Gold Coast in Australia.
The allure of the seaside is varied and deep-seated. For a start, the scenery is usually far more interesting – and certainly more alive – than at inland locations. Sunrises or sunsets over water are coveted by vacationers everywhere. Secondly, recreational activities abound by the sea. Activities such as surfing, diving, swimming, fishing, boating, boogie-boarding, and whale-watching all require water, while land-based activities such as hiking, biking and camping, or air-borne activities such as hang-gliding and paragliding can also be done at the seaside (with, some would say, enhanced views).
Those still in the work-force who are no longer shackled to their place of employment may seek to live by the seaside. Another category may also want to move there: the vast and burgeoning masses of retired people, including the bulge of baby-boomers who are headed for retirement.
Therefore, it is my contention that in the coming years, the value of seaside real estate is going to rise much faster than the comparable value of inland real estate. And this trend has already started to happen world wide. In the United States, the top 100 seaside counties have had population growths 50% higher than the national average since 1993. I imagine the statistics are similar in other countries.
Bear in mind that with a higher than average population growth, property values will also rise faster than average. And remember, if property values nationwide have gone up by say 10% on average, and you are getting better than average, then you are doing all right! So often people ask me where they should buy. I know a lot of these questioners do not want a general answer; they really want me to take them by the hand, show them a property, and have me say: “Buy this one, I will personally guarantee and underwrite your purchase!”.
Well, tough luck! I’m going to give you a generalisation, and it is this: Buy judiciously, using all the techniques and tips I give out in my column and in my books, tapes and software. But look closely at the seaside. Even if you do not want to live there yourself, the vast masses do. Mark my word: seaside properties will (in general!) rise in value faster than average.