Is space the next investment frontier?

Is space the next investment frontier?

Would you invest in space tourism? Not something that is going to be in mainstream portfolios any time soon. But some see possibilities of making money … eventually!

The Russians have already allowed a handful of entrepreneurs to visit the International Space Station via the Soyuz spacecraft, but the price of $20-40 million has inevitably restricted access to all but the wealthiest.

There are a number of companies involved in the development of space tourism, with the highest profile probably being Richard Branson’s Virgin Galactic. The group is developing an aircraft-launched re-usable space vehicle that should enable eight tourists to access space at a cost per seat of $250,000.

Despite a fatal accident in 2014 development work continues, although reports suggest some ticket holders received a refund following the tragedy.

Although space has been accessible for more than 50 years, space tourism is at the limits of practicality, with many looking at the sector with considerable scepticism. However, from a broader perspective, the combination of lower-cost rocket launches and cheaper satellites suggests space has entered the commercial mainstream.

Risk factors around space are ever present.

One is regulation, with governments licensing individual rocket launch systems. In contrast to earth-based regulation, space itself remains unregulated with no sovereign state or corporation able to ‘own’ any part of it.

From a practical perspective, space debris will become a growing concern, especially if the number of vehicles orbiting the earth increases in the near future. Practical steps such as minimising space junk and the manoeuvring of defunct satellites so that they can be burned harmlessly in the atmosphere still require the co-ordination and agreement of commercial and government operators.

Notwithstanding the challenges, after a period that saw the Space Shuttle programme decommissioned and government interest in space waning, the private sector has picked up the baton and is running with it.

For further information please contact: Adrian Quin, head of the Birmingham office for Investec Wealth & Investment, Colmore Plaza, Colmore Circus, Birmingham, B4 6AT.

Tel: 0121 232 0700
Email: adrian.quin@investecwin.co.uk