What is Thematic Property Investing?
The process of identifying long-term trends that you think will shape the future and investing in them.
Muse Capital has developed a range of themes that support our investment strategy. We are choosing to share these themes by regular episodes on our thoughts; our third episode covers why we believe property in Urban areas will outperform Regional areas.
Why do people move to Urban Areas?
Social scientists talk about two aspects of choice to move from a Regional area to an Urban area. These aspects are the "push" factors and the "pull" factors.
"Push" factors are those that make people want to leave the place where they are living. In many countries including Australia, Regional areas are poorer than Urban areas. Fewer jobs are available in these areas. This is typically the most important "push" factor. People are "pushed" away from rural areas because of the lack of opportunities.
Is it any surprise that Regional Queensland has the highest youth unemployment rate in the country at 25.7%? This is more than five times the national average of 5%.
"Pull" factors are those that make people want to come to a given place. Urban areas tend to have things that rural areas do not including jobs, education, and more cultural and social amenities. These things make cities look appealing. Because of such things, people are "pulled" towards the city.
The World's Biggest Employers are Rapidly Declining
Throughout the course of human history, Agriculture, Forestry, Fishing, Mining and Quarrying have been the largest employers globally, resulting in regions providing excellent employment opportunities for humanity.
Due to various technological advances, they are now the fastest declining employment sectors globally.
In Australia, these industries collectively employ 4.2% of Australian's in the work force, a figure that declines annually.
What does the future of Mining look like?
Above is a picture of BHP's Integrated Remote Operations Centre (IROC) located in 480 Queen Street, Brisbane. The Centre operates 24 hours a day, seven days a week, and is responsible for remotely controlling the operation of ten coal mines throughout Regional Queensland and the Hunter Valley.
IROC Brisbane employs over 200 people and is continuing to be expanded as more functions are able to be controlled remotely from their Brisbane CBD office tower.
Importantly, this facility continues to relocate Regional jobs to Urban centres.
Rio Tinto is the largest operator of Autonomous Haul Trucks (AHT) in the world, with 50% of their Australian fleet being converted to AHT by the end of 2019.
Rio Tinto Iron Ore Chief Executive Chris Salisbury said, "Rapid advances in technology are continuing to revolutionise the way large-scale mining is undertaken across the globe. The expansion of our autonomous fleet via retrofitting helps to improve safety, unlocks significant productivity gains, and continues to cement Rio Tinto as an industry leader in automation and innovation."
Importantly, AHT controllers are able to be located in office buildings in city centres, as opposed to traditionally requiring fly-in-fly-out (FIFO) workers.
Do we all remember hearing reports of FIFO truck drivers earning $200k a year during the Mining boom? These jobs are transitioning to cities where remote operators monitor multiple screens in an office building.
Our House View on Regional Property
The advancement in the technology sector is continuing to see Regional jobs relocated to Cities. Similarly, Cities are outperforming Regional areas due to the vast majority of people wanting to live in metro areas.
Muse Capital is focusing our purchasing efforts on high growth locations that are desirable to live with a diverse range of industries supporting growth.
At this stage, we are concentrating on growth corridors in South East Queensland (Brisbane, Gold Coast, Sunshine Coast and Ipswich).
New Opportunities
Muse Capital is currently finalising negotiations on two Childcare Centres. For further details, register your interest now for a first look.