The Biggest Boom of All Time is Still Ahead of You

In today’s Money Morning…what China’s new wave of renewable energy means for Aussie investors…an Indian construction boom…the clock that could tell you when to invest…and more…

Shortly before the Chinese New Year festivities (back in February), China announced it will spend 2.5 trillion yuan — US$361 billion — on renewable power generation. The funds are to be spent before 2020.

The announcement gained very little press coverage in Australia.

Renewables are designed to shift Chinese energy production away from ‘dirty coal’, as they described it, towards cleaner fuels.

The Chinese government expects to create 13 million jobs in the sectors involved.

13 million. Over half the population of Australia.

This was laid out in the Chinese National Energy Administration’s blueprint document.

It’s a lot of money. Estimates suggest that US$72 billion will be spent each year to complete the task.

Of course, the Chinese government is always big on announcements and statements like this. We see such things often.

Is it realistic? Will it happen? Could the Chinese government really do it?

Who can say? But credit is deserved for the attempt.

It’s the third year of China’s ‘war on pollution’. If you’ve been there, you’ll know why it can certainly be called a ‘war’.

Significantly, it creates a lot of new jobs as the more polluting plants are phased out.

But the Chinese have even more ambitious plans afoot. Such as the Chinese ‘One Belt, One Road’ initiative. This could really get the real estate cycle moving further.

No doubt you’ve heard a lot about the ‘New Silk Road’. So we won’t bore you with all the details.

The important things is that the Chinese are committed to spending $1.6 trillion over the next decade to get the project underway throughout Asia, Africa and the Middle East.

The funds will feed straight into land value in the areas where the money is spent.

And the Chinese are not the only government spending big money.

India’s Prime Minister, Narendra Modi, wants to bring far more affordable homes to half a billion Indian citizens.

Bloomberg reports that some 60 million new homes are to be built between 2018 and 2024.

60 million new homes.

The article says:

In a country where slums sit cheek-by-jowl next to palatial luxury — including what’s been reported as the world’s most expensive private home — India’s unhoused may soon become a more potent economic growth driver.

Prime Minister Narendra Modi’s drive to bring homes to the country’s 1.3 billion people, rising incomes and the best affordability in two decades will unleash a $1.3 trillion wave of investment in housing over the next seven years, according to CLSA India Pvt.

And goes on to say:

‘“The housing sector is at a tipping point and will be the economy’s next big growth driver,” Mumbai-based analyst Mahesh Nandurkar and his colleagues wrote in a note last week. “The catalyst is the government’s big push for an ambitious housing program.”

Modi has been on a mission to expand affordable housing in Asia’s third-largest economy. In February, the government granted affordable-housing builders “infrastructure status,” making them eligible for state incentives, subsidies, tax benefits and institutional funding.

This will create about two million jobs per year. And it should add as much as 0.75% to India’s gross domestic product.

The volume of social and affordable housing will rise almost 70%, to 10.5 million annually by 2024.

That’s a US$1.3 trillion wave of investment in Indian housing over the next seven years.

This clock tells more than time

The world runs in 18.6 year real estate cycles. Historically, we’ve been led into and out of them by the sheer size of the US economy.

Here’s the real estate clock we use over at Cycles, Trends and Forecasts. It helps to guide our investment decisions.

Click to enlarge

Cycles, Trends and Forecasts subscribers get a real estate clock labelled with the dates of the turns. And the cycle turns, well, like clockwork.

Now we haven’t even talked about the infrastructure that President Trump wants to get started. If indeed he ever does. It probably doesn’t matter, really.

The biggest boom of all time is still ahead of you. It could run through the entire century, broken only by the usual land price-led downturns.

You can know the dates when these downturns will occur well in advance.

If you’d like to know how, watch your inbox this week for a new video report.

Meanwhile, Chinese company Xiaomi’s sales of smartphones in India surpassed US$1 billion in annual revenue last year.

Xiaomi has only been in India for two years.

Three quarters of these phones are assembled in India as the company follows the Indian government’s request to help the ‘Made in India’ campaign.

More jobs, more money.

All the more that can go into land value over the next decade, worldwide.

This is how your real estate cycle turns. A really big one is unfolding. Can you afford to not be aware of this cycle?

Phil Anderson

Phillip J Anderson is an Australian academic, author and student of stock, commodity and real estate cycles. Drawing on the work of British economist Fred Harrison and American technical analyst WD Gann, Phil developed his own theory about 18-year real estate cycles in the early 1990s. Since then, Phil has been using cycle theory to guide his own investment decisions — crediting the phenomenon with his decision to move to a 100% cash position in July of 2007, just before the GFC wreaked havoc on the Australian stock market. He has also built up a lucrative property portfolio here and in the UK. Phil is currently predicting a 14-year boom in Australian house prices; an idea he expands on more in a brand new Fat Tail Investment Research film, ‘Remembering the Future’.

Money Morning Australia