Thursday, January 13, 2011

Eat Your Heart Out

At the height of the real estate boom people bought properties left and right, some in places you would never believe would have any future value; especially rice paddies in rural areas that normally cost $.25-.35 per square meter.

So this one man whom I know was one of those people. Of course, he had a little money to spend to begin with, true to the maxim: ‘To make money you need money.’

He bought lots all over the place in 2005; one of those was a rice paddy of 3 ha near the Vietnamese border. The price he paid was $30,000, so $1/m2; already an inflated price at that time. Now guess what? Yep, he sold it in December – are you sitting down? - for an unbelievable $1.0 million. Who would pay such a ridiculously high price for a rice paddy? It turns out that the area is up for development due to a widening of the road to Vietnam (it is not road number 1) and an upgrading of the border crossing to a major entry/exit point to/from Vietnam. I don’t know who the buyers were but perhaps they want to build a casino on the lot; if not that, then definitely something that will recover the investment in rather short a time, otherwise it wouldn’t make any sense economically.

Now you people out there who always believe that the spoils of the rich were gained in a shady manner, how is that for a profit? I can just hear people say, ‘Sure, he is probably a big shot in the government and/or well-connected.’ This guy just happens to be a private businessman, nothing else; no special political affiliations. The way I see it this is pure capitalism at work, nothing more nothing less.

1 comment:

Anonymous said...

Something much more simple: speculation and loads of luck.
99.99 percent are stuck with rural land at ridiculous prices. Someone will sometimes strike lucky like your friends.
Unless of course they start cultivating the land but then these guys were speculators not farmers. They will sit and hope that trees will grow and bear fruits with dollars bills.

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