Why real-estate must stop capitalizing on buzzwords and look towards an era of Post-urbanisation
Urbanisation is scary when you think about it. Really scary. It is also a creative marvel and one that I have the utmost appreciation for. In my opinion, urbanisation is fundamentally multi-centralisation of globalisation (yes, that's a lot of "ations"). We seem to have developed core hubs for connectivity, primarily through geography, with which everything else grows from; ideas, construction, food, culture and arts. Even global travel is simply from one capital hub to another - whether for business or pleasure, I can't imagine there are many Singaporeans actively looking in on the UK thinking, "I've always wanted to visit Oadby". So whilst urban-fuelled globalisation began with the notion of scaling and diversifying ideas it has, in a sense, become a recycling of ideas perpetuated through Facebook, LinkedIn, Snapchat, Twitter or anything else you can fit into the internet-connected screens we are dependent on. It is argued that there is no such thing as true originality. Well, let's at least think of giving it a chance, no? Cue my first buzzword: De-centralisation.
De-centralisation appears nowadays in many forms, from moving away from traditional hierarchies to its enablement through technologies such as blockchain or DLT. Our ways of doing business are becoming less centralized through the mentality, "why would I pay competitive rates when I can manufacture in China? or program from India?". In essence, the world is becoming flatter again. Or at least, through the adoption of technology, the flatness of the business landscape is not a hinderance to doing business, it is becoming a competitive advantage. We globalized to connect, we connected to mass produce and now, through tech-powered urbanisation, we can concentrate the control of that production in one city for convenience. So what next? Now that China and India no longer require an asthmatic Himalayan-conditioned messenger pigeon to do business or start a war, how might people arrange themselves? What living formations are possible and how might this lead to new schools of thought? Cue my second buzzword: Communities.
A community is a social unit with commonality such as norms, religion, values, customs, or identity. It is also fast becoming a word used primarily by contemporary real-estate sectors such as co-living, co-working and other build-to-rent sub-sectors to attract high investment valuations and promote a certain image. Whilst high investment valuations are something end-users, developers and operators of real-estate have relatively little control over, it is the image they choose to create by using the word community that I believe needs a re-think if they are to solve key issues such as urban loneliness and affordability. For a young working professional such as myself living in central London, a community would be a group of people I can rely on in times of loneliness, and have become part of, based on commonalities such as the above. A community, in my opinion, would not simply be a collective of people who choose to live and remotely work from a dimly painted neon-lit building hosting gin and vegan-bacon popcorn evenings, with sugar-free avocado juice on tap, who later retire to their symmetrical dorm rooms to sleep in their tech-enabled wall-retracting bed, all at an "affordable living" price. I see no real meaningful psychographic commonalities between the members of this community other than the desire to try something they have never tried before at unaffordable prices, in which case I would also have the option to take a permanent residency at Centre Parcs. My point being, are we really addressing core urban issues such as housing, loneliness and affordability, or are we simply building another short-lived urban experience much like Topman on Oxford Street setting up a DJ stage in an attempt to retain the ASOS converted customers and maintain profitability fuelled by urban congestion? My bet is on the latter and I am certain I wouldn't want to raise my children there. So what might the alternative look like? How might human geographical distribution look if we embrace a version of the former image of community rather than the latter, and what would this look like for living and in turn, global real-estate distribution?
Take the example of a couple who own a manufacturing warehouse. The couple could enjoy their relationship rather than worrying about factors contributing to an ever increasing divorce rate. They could settle in their location of choice all the while having full control of their fully automated warehouse. Robots operating the warehouse would be heavily optimised for their function, further still through IOT processes that could all be monitored in real-time through their iPad. Through blockchain they would have a secure and private network connecting all the stakeholders involved in their supply-chain and business, irrespective of location. The cost of living in any given location in a post-urbanised world would be significantly cheaper due to the formation of smaller locally supported communities around the globe living in carefully habituated environments built sustainably with respect to building materials and energy. The growth of cheaper and environmentally conscious travel would allow the couple to experience a wider array of these developed habitats/cultures and diversity of thinking between each of these habitats would increase again rather than ideas being recycled between urban hubs around the world, leading way to new schools of innovation and thought.
What would this mean for real-estate?
True sustainability, where urbanisation is not an evolutionary pressure, rather a choice. Or at least as true as is possible to achieve with a growing population. Everything becomes less dear and more affordable due to a more balanced global economy. City congestion needn't be managed, simply spread out and reduced. Each of these local communities or habitats across the world would be adapted to their own specific needs and harness their unique environments and building materials so to minimise damage. House prices wouldn't be so dependant on the location of the nearest underground station, or the number of steps it takes to walk to the nearest Pret. Loneliness would be reduced as members of the local community would simulate the role of satisfying family dynamic, whilst travel to the rest of the world would simulate the notion of visiting friends with relative ease, all the while remaining connected. Prop-tech valuations would be less relative to cities and more respective to locally developed tech... I think you get the image.
I do believe we are heading in the right direction. Perhaps, however, in a less efficient way than could be achieved considering we've been helped along by Tim Berners-Lee and IBM, who have practically allowed us to compile a ‘Dummies Guide to Fixing Humanity's Greatest Blunders’. When the coin lands on heads we have apps such as Calm and Headspace who are foreseeing potential psychological issues such as information overload syndrome. Companies such as Sleeperoo are enabling remote communities and Microsoft Teams is supporting that effort. Climate Trade is in on environmental blockchain to incentivise treating the planet well (how messed up is that) and partnering up with Melia Hotels to push that. But when the coin lands on tails we see the co-economy capitalising on the word "community" whilst only creating another bubble of loneliness within a lonely city. We see gyms being renamed to "movement studios" so they can offer an alternative "affordable" payment plan that outlives death. We see Collateralized Debt Obligations being renamed to, well, Collateralized Debt Obligations, and we see urban mobility companies taking on their own definition of the first law of thermodynamics - "congestion can't be created or destroyed only changed to different forms within the city".
Connecting the heads and tails of the coin are the Google, Facebook, Twitters of the world. They seem to live by the standards of the tail flip, but look to increase the probability of landing heads. Real-estate and construction also have a majority stake in connecting the heads and tails of the coin, but must take the front foot to look beyond urban expansion and see through the inflating buzzwords.
We all love that new co-working coffee shop in Brixton, and we're all subject to the pro's and con's of human decision making, so no criticism on any single company or person. There comes a point where having to remortgage your house to keep up your weekly coffee habits is just ridiculous. We have to think smarter and predict the roll of the dice, or learn to control the flip of the coin, and real-estate has that privilege.