Rich Listers Know the Value of Property

The Australian Financial Review (AFR) proudly released their rich list in a glossy magazine this month.

Folks love to read about the rich and famous. An entire industry has been supported by their stories. Magazines and TV shows would not be the same without them.

The 2017 Financial Review Rich List breaks new ground. Billionaires in Australia now reach down to number 60 on the list.

So, how do they build their wealth?

At number one is Anthony Pratt and family, worth $12.60 billion. They inherited a great cardboard box manufacturing company from their patriarch, Richard. Anthony expanded the business in the US, where Pratt Industries employs 7000 people.

In a country with massive natural resources, it’s no surprise the top 10 list includes a few mine owners. Resources, of course, are part of the economic rent.

Gina Reinhart is at number three with $10.41 billion from the iron ore holdings she inherited from her father, Lang Hangcock. She’s also built a huge business in agriculture.

Ivan Glasenberg is a Swiss resident and was born in South Africa. The AFR claim him as one of our own as he has Australian citizenship. At number five in the list, his $6.85 billion fortune is also in resources. It comes from his 8.4% stake in Glencore, the world’s biggest commodity trader.

Another winner from resources is Andrew Forrest. He founded Fortescue Metal Group. Fortescue has grown in status as the world’s lowest-cost iron ore producer. Forrest’s stake in the company is worth $6.84 billion.

At number nine is James Packer with $4.75 billion. James grew the entertainment (gaming) business inherited from his father, Kerry.

These guys account for half of the top 10 in the list. One earned a fortune from manufacturing, one from gaming and three built their fortunes from resources.

What about the other five?

At number two is Harry Triguboff with $11.4 billion from property.

He’s not exactly a household name. You’d be forgiven for asking, ‘Harry who?’

But his Meriton property development group dominates the Sydney skyline.

Triguboff famously carries little debt. He still feels the pain from a run-in with the banks in the 1970s. But such is the strength of his company’s balance sheet, he provides finance to some buyers of his apartments.

In the number four spot is Frank Lowy with $8.26 billion, also from property.

Lowy’s life is an amazing story.

70 years ago, young Frank was arrested as an illegal immigrant by British soldiers and put in a detention camp.

Last week, he was awarded a knighthood in the Queen’s UK Birthday Honours List. The award was for services to British business and philanthropy.

A lonely boy in a detention camp has grown to become a knighted, international multibillionaire.

John Gandel is at number seven with a $6.10 billion fortune built from property and investment.

At number eight is a Hong Kong billionaire who studied for an MBA at the University of South Australia in the 1990s. Hui Wing Mau has built a fortune of $5.39 billion, largely through Hong Kong-listed Shimao Property.

Rounding out the top 10 is Stan Perron with $3.90 billion. The oldest billionaire on the list receives iron ore royalties. He backed partners Lang Hancock and Peter Wright with a £500 loan in 1959. But most of his fortune comes from investments in property.

Of those in the top 10, one is a manufacturer, one is in gaming and three are in resources. The other five all made a fortune in property.

These five people all understand the economic rent. And 27 of the top 60 billionaires in this year’s AFR Rich List made it onto the list via investments in property.

That’s half of the top 10 and nearly half of the top 60.

Note how most of those property owners in the rich list make property their ‘business’. They get to know their business.

And maybe — just maybe — they also know a bit about property moves in cycles.

Source: Cycles, Trends & Forecasts

Click to enlarge

We reckon they’d be glad to learn about Phil Anderson’s Grand Cycle Theory. This would remove any niggle of doubt about property moving in cycles.

Phil has used his theory to accurately predict market moves time and time again.

It flies in the face of conventional wisdom on Collins Street and Wall Street.

Go here for a brand new video demonstration of how you can use the theory to predict market moves.

Regards,

Terence Duffy,
Head Researcher, Cycles, Trends & Forecasts


Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come.


Money Morning Australia