This article by OPP Connect editor Adrian Bishop was originally posted on OPP Connect.
Space travel could make a world of difference to the overseas property market within the next decade, says a leading agent.
With suborbital flights able to cut the London-to-Sydney journey time down from 21 hours in an aircraft to 2.2 hours, global property markets could radically shift, says the 2014 Wealth Report from Knight Frank, which is being published on Wednesday.
Liam Bailey, Knight Frank’s Global Head of Residential Research, says, “By traveling outside the Earth’s atmosphere, gravitational forces will allow spacecraft to travel at [more than] 4,000 miles per hour, so breakfast in Mayfair could easily be followed by lunch overlooking Sydney Opera House. It doesn’t take much imagination to see the dramatic impact this innovation could have on global luxury property markets.”
Suborbital flight, where craft are launched briefly into space so they can reach supersonic speeds before coming back down to earth, would cut the flight time from New York to Moscow from 9 hours 20 minutes to just one hour, from San Francisco to Singapore from 16 hours 50 minutes to 1.8 hours, and Dubai to Vancouver from 14.5 hours to 1.5 hours.
Leading overseas property commentators say the prospect would transform the sector, but believe it could take many years to come to fruition.
Colin Murphy, director of global property investment company Torcana, tells OPP Connect, “While a transportation system [that] could bring people (or goods) from one side of the globe to the other in a few hours would revolutionize a whole host of industries, I think we are a few decades away from it having an impact on global real estate markets.
“This does not look like an opportunity that my generation of property agents will have a chance to exploit. But if I sell enough properties between now and then, perhaps I’ll treat myself to a spaceflight as a retirement present!”
London is currently the leading overseas property destination over New York because it is more convenient for African, Middle Eastern, Russian and European ultra high net worth individuals, says Knight Frank’s Wealth Report’s Global Cities Survey. But with the advent of suborbital travel, all that could change within a decade.
Bailey says, “Take second homes in Europe. Right now, demand is mainly restricted to European investors, who try to limit their travel to less than two hours. In future, that same time limit could allow Chinese or Indian investors to pop over for the weekend to visit their Tuscan farmhouse.
“New York may well gain ground from London, but that is in relative terms. As all the global hubs become dramatically more accessible, the criteria for choosing a second home become more about the location itself, and much less about the convenience of travel.”
One crucial factor will be the price of tickets, says Knight Frank. “If this is a technology for billionaires only, then property market disruption might be limited to a wider choice of global lunch options. But if the price drops to allow the merely very wealthy to access suborbital flights, then every assumption about current property prices will have to be reconsidered.”
Among companies racing to begin commercial suborbital spaceflight is Virgin Galactic with its SpaceShip2, which has now completed three powered test flights, reaching a speed of Mach 1.4 and an altitude of 71,000 feet. Among its rivals is XCOR Aerospace, which is developing its Lynx spaceplane, which is designed to reach up to 100 kilometers in altitude along a suborbital trajectory, taking off like a business jet, and returning to its runway like the space shuttle.
Virgin Galactic boss Richard Branson told The Wealth Report, “New commercial space will be one of the most exciting investment sectors in the next 20 years, driven by the initial successes of companies like Virgin Galactic. There is already some good evidence that the leading players are receiving high levels of interest from the mainstream investment community and attracting valuations that reflect confidence in future growth and opportunity.”
Although suborbital trips for wealthy tourists will keep Virgin Galactic busy in the short term, Branson says the next step for the technology will be to slash travel times around the world. “I’m very excited about a future version of our current spaceship, which will make transcontinental travel clean and fast — London to Sydney in a couple of hours with minimal environmental impact.”