The $10 million hill in the desert

Andreas Ettl - Wed 04 Oct, 2006

...On the hill at Lake Powell many houses are already being built. Several "lot sold" signs indicate there is more activity coming soon. We wondered how much a piece of the desert could possibly cost around here. A lot featuring 12,197 square feet was for sale at $99,000. That's $87 per square metre! And with more than 50 lots, the hill must have a value of almost $10m...

 
 
It wasn't until construction began on the Glen Canyon water reservoir that people came to this part of Arizona.

Before 1956, the only landmark was a mountain at the base of a deep Colorado River canyon. But a little village was founded to support the small army of workers. They called it Page.

On September 22, 1966, with the dam complete, the second largest canyon in the world was flooded. It took 17 years before Lake Powell was fully filled. Now it is America's second-largest artificially created lake, a testament to 20th century engineering and concrete techniques. The shoreline stretches for 3,150 km...longer than the entire western coastline of the United States.

The former worker's town of Page is still the largest city on Lake Powell – yet it has a mere 7,000 people. The Glen Canyon doesn't tend to attract long-term settlers. Poor local infrastructure may be one reason; 40 degree Celsius heat in the summertime may be another.

About six miles away from Page, however, you encounter Wahweap Marina, the largest marina on Lake Powell. The marina is used for tours of the lake. It offers some accommodation for fishermen and other day-trippers, too, on two camping sites.

Leaving Wahweap Marina and following highway US-89, we found a sign for "Lake Powell View". But we couldn't see much of the lake.

Instead, we found ourselves in the midst of a busy new development...

On the hill at Lake Powell many houses are already being built. Several "lot sold" signs indicate there is more activity coming soon. We wondered how much a piece of the desert could possibly cost around here.

So to find out, we headed for the estate agents office further up the hill...

A lot featuring 12,197 square feet was for sale at $99,000. That's $87 per square metre! And with more than 50 lots, the hill must have a value of almost $10m.

One thing is for sure: someone has a good sense for business here. Most likely, the initial investor only paid a sliver of this sum for the entire hill. One other thing can't be denied either: the US real estate boom has blown into the most unlikely places.

Although large areas of Lake Powell are adjacent to the Navajo Indian reservoir, land on the shore is not really a scarce commodity. And even though there's nothing to suggest this will be the next "hot" downtown site, anyone buying land here could still do so at rock-bottom prices up until just a few years ago.

Then, if you did like the smart locals of Page, Arizona have done, and developed a few roads to help attract visitors and young families, you'd now have the opportunity to make a good deal of money. I can't say whether the initial investor quadrupled or multiplied his investment 20 times. And in a way it doesn't matter.

You and I can't get in anymore. This little gold rush has been and gone. I certainly don't believe US real estate – least of all in the desert! – offers a beaten down, unloved opportunity to get in at super-cheap prices today.

But my little road trip into the desert shows one thing, for sure. The big money is never made where everyone else is digging for gold. Only by seeking out new, un- noticed investments will you make the very best deal in the end.

This is the philosophy that keeps the Global Profit Hunter team up and running. Page, Arizona won't figure in our next recommendation. But investments that look to the untrained eye as barren and sparse as the Arizona desert surely will.


Until next time,

Andreas Ettle
for Daily Reckoning