Property

The next property frontier

Private space tourism took a giant leap forward last year and this has pundits wondering about hotels and other buildings popping up any time soon.

Thursday, May 19th 2022

Taking a trip into space is not only limited by cost – tickets on a Virgin Galactic flight start at $878,470 – but also by the necessity to embrace an element of danger and to tolerate high g-forces.

Overcoming such challenges will open up opportunities for investment, real estate and the planet, says real estate company Frank Knight’s latest Wealth Report.

A matter of time

“Space is dangerous,” says Dr Nikodem Szumilo of the Bartlett Real Estate Institute, one of the first academics using data to explore the economics of space. “Yet it’s just a matter of time before more take on the challenge of this risky, high-octane destination. After all, people dive with sharks.

“When the Antarctic first opened up to the public, people flocked there. Space is no different. More private citizens flew to space last year than in the whole of previous spaceflight history,” says Jane Poynter of Space Perspective.

The business aims to make space more accessible by offering what it describes as “a gentle flight in a pressurised capsule propelled by a spaceballoon”, as well as pitching prices at a more affordable level.

A new perspective

The billionaire space race has garnered some criticism from those who believe resources would be better targeted at solving problems on Earth – but mass space exploration could help save the planet, believes Poynter.

“The opportunity to view the world from space enables one to connect intensely with our planet and the singular human family that inhabits it,” she says. “It broadens perspectives and creates a deep commitment to social and environmental causes.”

Her words are echoed by Amazon’s Jeff Bezos, the second billionaire in space. Speaking at last year’s COP26 climate change conference in Glasgow, he proclaimed: “Looking back at Earth from up there, the atmosphere seems so thin, the world so finite and so fragile. We must all stand together to protect our world.”

Room on the moon

So what are the implications for real estate? Will we see hotels and other buildings in space and on the Moon? Perhaps not for a while.

“It costs billions of dollars to build an orbital space station and hotel, and would cost many more to construct a hotel on the Moon,” says Poynter. “The full value of that real estate is still to be realised, and we cannot yet imagine the enormous opportunities.”

We won’t be booking a room in space for some time yet, agrees Szumilo. “On average it takes five years to develop a satellite. A hotel might take 10 to develop and five to launch. I think it will be 30 years until we see hotels in space and at least 50 years for the Moon.”

Valuing space

How does one value space in space? “There have already been some high value transactions – including the $1,081 million paid in 1996 for a specific satellite broadcast location for five years – but real estate in space is not what people think,” says Szumilo, whose research has focused on the space occupied by satellites, a sector dominated by TV companies in the past.

“The real challenge is understanding where value will be created and where demand will concentrate. Currently the density of satellites is dictated by the density of the population on the planet.”

Looking ahead, Szumilo believes that it is likely human and economic activity on Earth will determine the footprint in space in the same way.

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