The Unique Property
Governments Are Coming for Real Estate
Back in April I wrote a blog entry on my property site about
real estate in China so those of you who follow my writings
about real estate you will not be surprised at what is currently
happening there, and what that is likely to mean in the future
for the rest of the world. You will have been forewarned, and
not been surprised at what is going on in Germany right now, and
how this whole mess is likely to play out.
Towards the end of my original article I make a bit of a
miscalculation. Here is what I said back then.
'The whole operation is a massive fraud. Ponzi schemes always
end badly, but as with all predictions these days, one cant tell
when the implosion will occur. Maybe this fraud will continue
for another decade, or maybe even another generation, but I cant
see it running beyond that.' (https://www.property.org.uk/unique/blogs/China%27s%20Ponzi%20Scheme.html
Oh dear. My timing was a bit out. Evergrande, the biggest of
these Chinese property companies is bankrupt. Idiotic Chinese
owners of these bankrupt properties have been paying Evergrande
money to keep it going, which means they were throwing good
money after bad. Their life savings are gone. Their properties
are falling down, or haven't even been built, and they are
This is going to end badly.
You might think this is all happening a long way from home, but
I mentioned Germany at the beginning of this article. Have you
been following what's going on there? If not, perhaps it's time
you woke up and paid attention because something nasty is eating
at the property fabric not a million miles away. Maybe what is
happening now in China will shortly be happening, but in a
slightly different way, in the EU.
The bottom line is, governments are coming for real estate.
There's a lot of talk about stock markets crashing. There
doesn't seem much chance of that at the moment, but who knows? I
dont have that all-essential crystal ball. But if your pension
funds are invested in real estate companies you might like to
have a look at the political ruckus that is stirring up in
There is a proposal to break up property companies because they
are controlling the rental figures. Are you invested in such a
company to provide for your pension? If so, there could well be
trouble ahead. Property owning companies may well be about to be
destroyed. First in Germany, and then, maybe, all across Europe.
I assume that if a company only owns one property that will be
exempt, but any more and that company will be at risk of being
taken over by the government.
This has been on the political radar for some time. There are
two rather serious aspects to what is currently happening in
First, we have to look at one obvious factor that is centre
stage in politics. Most advanced countries are broke or rapidly
going broke. The covid experiment seems to be working rather
well on some levels due to the unbelievable stupidity of the
more ignorant souls, but on a basic level the whole operation is
proving to be a disaster. Not only is it costing money which
isn't in the piggy banks around the world, but it is destroying
the commercial base of so many countries, and that is
particularly the case in Southern Europe.
You only need to see the collapse of one important sector of an
economy to note how the various parts of that economy depend
upon each other. If one important sector goes down, there is a
knock-on effect. This is particularly obvious in the Algarve,
and all across eastern and southern Spain. But there is a more
insidious effect all across Europe, and indeed, the world, But I
will write about that next week.
And the hospitality sector is about to take a hit from another
direction. Maybe not this year, maybe not next, but not far out
is the prospect of virtual reality starting to make a serious
impact upon travel. Why spend all that money and put up with all
the inconvenience of travel when you can experience foreign
parts simply by putting on a headset? And the millennials will
love that, and, like it or loathe it, they are the future.
But that wasn't the point I was intending to make. How are
governments going to try and balance the books? The obvious way
is to print money, and devalue the currency, which will make us
The other way is to take more money from people. What are the
easy ways to do this? Think about it, what is the easiest thing
to tax? Your home. You have to declare it, as everyone you deal
with is going to know your address. You can't hide it. Some
people have tried that. I seem to remember someone building a
house partly inside a stack of straw bales. And your house is
valuable. It's a sitting target.
Is Germany the first country in Europe to start a serious attack
upon real estate? The proposed playbook is to start attacking
the giant property owning companies. We are currently waiting to
see how this will play out as the general election has disrupted
the timetable. Will there be an attempt to break them up? Or
Already in the UK one is penalised for owning real estate, and
harried for being a landlord. Yet pension plans are more often
than not founded upon investing in such companies. It is going
to be interesting watching what happens over the next few years.
The real problem is that once property rights are in the firing
line for whatever reason, we are facing a big problem. Once
property rights are no longer sacred, nothing is. Real estate is
called real for a reason. Take that reality away and what does
any value rest upon? That's the first thing a communist state
does, take away your right to own land. Ever come across a
communist state that survived for very long, or made living
conditions better for its people?
We live in a world where the perceived political direction for
the near future is a massive surge to the left. This is somewhat
puzzling until you realise that a large section of the public
these days has very little education, and almost no knowledge of
the outside world, or even recent history. If they did have any
education you would think they might be able to draw a few
conclusions about the way far left principles work. There are
plenty of current examples, and even more from the recent past.
How about this little list? China, Zimbabwe, Venezuela, Cuba.
Not a pretty sight. I bet not a single reader would want to move
to any of those places. So why would anyone with half a brain
espouse those principles?
This new developing world order we inhabit is not a happy place.
And sadly, it is likely to get a lot worse from here.