theSun February January 2017

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>Global transition causing shift in lifestyle trends, transforming
mindsets and habits, changing property temperaments
Era of change THEREis a paradigm shift
taking place if you did not
notice. This has influenced
lifestyles, which in turn have
led to changes in the run of themill.
The normand conventional way
things were once done are pretty
much bowing out, welcoming a
newness that has also found its way
into the real estate scene across the
globe.
The root cause behind these
changes according to a report on
“Global Cities by Frank Knight”,
are said to basically stem from:
the era of low to negative interest
rates which has reduced investors’
expectations onwhat constitutes an
acceptable return;
the avalanche of technological
innovationwhich has seen over
60%of Earth’s citizens owning a
smartphone; and
our current “innovation
economy” where supply is not
keeping pace with demand in both
commercial and residential real
estate, causing tech and creative
firms to rely on pre-let deals to
accommodate growthwhile their
young employees struggle to find
affordable homes.
In a nutshell, the report informs
of the rising of technology firms
and creative workers around the
globe that are attracting talents and
high-value professionals at the top
of the recruitment wanted list,
hence inciting the rapid growth
of “global cities”.
RISE OF GLOBAL CITIES
States the report: “The urban
economy is increasingly people-
centric. Whether a city is driven by
finance, aerospace, commodities,
defence or manufacturing, themost
important asset is a large pool of
educated and creative workers.” In
this new era, these creative talents
of the new age workforce are
considered highly-prized
commodity. And global cities are
expected to thrive or sink on their
ability to attract this key
demographic. This in turn, has
caused real estate to increasingly
become a business that seeks to
build an environment that attracts
and retains such people, something
that is already taking place around
the globe.
To slowly take us into this
newness of things, let us first look at
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some terminologywhich
has become quite the
rage where property is
concerned. We have
been hearing a lot of
terms and catchy phrases
such as “live-work-play
environments”, “mixed-
use developments and
integrated spaces”, as
well as “buildings with
beds” among other
modern day buzzwords.
Scrutinise these phrases
of the times and notice
how they all point
toward lifestyles.
With that, let us first
explore the catchy
phrases and fascinating
terminology associated
with the sprouting of
such cities across
the globe.
‘LIVE-WORK-PLAY’
ENVIRONMENTS
Some consider a
ubiquitous phrase
deemed founded simply
by the root of the very
demand for a “live-work-play”
(LWP) lifestyle. Apparently, it
was not coined up by developers
or those in urban planning, and has
increasingly become a standard
bywhich “mixed-use”
developments aremeasured. The
concept has been known to have
some linkwith “Maslow’s hierarchy
of needs” - much of which today’s
generation feel that amore apt
name would be “live-work-play-
eat-shop” (LWPES).
‘MIXED-USE’
DEVELOPMENTS
There are a variety of descriptions
tomixed-use developments.
However, amore generic depiction
would be “a pedestrian-friendly
urban development that consists of
amix of residential, commercial,
cultural, institutional/industrial
spaces that blend, and physically
and functionally integrate. The
concept also known as “integrated
developments” can be
accomplished via a building, a
housing area/district/community,
or even a township/city.
‘BUILDINGSWITH BEDS’
Considering the demographic shift
that is leaning towards the:
younger workforce comprising
millennials who lead quick-paced
lifestyles and are almost always
on-the-go, interacting with a
global pool of networks;
not forgetting the international
influx of foreign/global higher
education students;
plus senior living and healthcare
as there is a large ageing
population that is growing –
according toUNprojections, a
12% increase in the number of
people above age 75
between 2015 and 2020; and
an increase in the number
of global jet-setters
including those who travel
for work and leisure –
IATA forecasts suggesting
global passenger numbers
rising around 5%per year
for the next five years.
Withmodernisation
and a society that is
“pressed for time” and
more “connected” on-line
than in reality –mobile
work spaces and inner-city
living aremoving also
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towards “buildings with beds” –
homes that offer a roof over one’s
head that basically provide a place
to sleep. Demographics are said to
favour investment in housing for
people at the beginning and end of
their adult life. “Residential
investment is moving into the
mainstream through growth in the
private, rented sector as
demographics and globalisation
support demand for hotels, student
housing, senior living and
healthcare,” reported an article by
Knight Frank head of data analytics
Mark Clacy-Jones.
EXEMPLAR CITIES
Along with changes in technology
that has affected the way companies
are born and how they function,
thus the evolution of society, hence,
flux in lifestyles, the way themasses
engage, network and integrate. With
this mega shift, property investors –
landlords and leasers across the real
estate spectrummust be “in the
know” about where “creation” is
taking place and limit their
exposure towhere there is
“destruction”. [creation – areas and
regions generating hype activity
that are drawing the pool of today’s
talents and businesses; destruction –
areas and regions that are inflexible,
refuse to advance with the evolved
times, including cities that prefer
to remainwith the “old”
unaccommodating ways of doing
things]
Citing an excerpt froman article
by James Roberts called Super
Cities – “The industries that drive
themodernGlobal City are not
dependent onmachinery or
commodities, but people, delivering
economic flexibility ... Themost
flexible cities command the highest
real estate rents and lowest yields,
and that will continue as they cope
best with rapid change.
With the current trend
established founded on – speed and
agility, fluid andmotile – the
common challenge for landlords
according to Roberts is how to
assess firms (tenants) that do not
even have a three-year record of
existence but are clearly “the
future”. The answer he says, is that
both landlord and tenant need to
approach real estate deals with
flexibility – “The landlord giving
ground on lease terms and financial
track records, and the tenant,
compensating the landlord for the
increased risk via a higher rent”.
EMERGINGMARKET CITIES
With the rapid changes that have
been taking place and the constant
FORECASTPOPULATIONGROWTH INGLOBALCITIES
2015TO2020
Source:TheUnitedNations
18.7%18.5%
17.3%
15.1%14.7%
14.3%14.2%
9.5%9.4%
8.5%8.5%
7.8%7.7%
7.1%6.9%
5.5%5.2%5.0%
4.5%4.5%
BeijingDubaiBengaluruAustinKuala LumpurShanghaiBogotaBangkokMumbaiBrisbaneSingaporeDublinMelbourneTorontoWashington,DCLondonSydneySeattleMadrid Delhi
global evolution among themasses,
Roberts reminds that countries
once booming just a fewyears ago
due to rising commodity prices are
now adapting to slower growth.
Those that were dismissed as
“busted flushes in 2009 due to high
exposure to financial services”, and
adapted to changes in technology
adopting fresh innovation in the
their businesses, are now thriving
as innovation centres. Such
“emergingmarket cities” are those
that have repositioned themselves
away frommanufacturing and
moved toward creative services,
many of which present “a new
challenge to the western global
cities”. A perfect example would
have to be Shanghai, claims Roberts,
“now seeing rapid expansion of its
tech and creative services”.
While emergingmarkets develop
into global cities, they adapt towin
over the right talents and high-
skilledworkers for the workforce
by spreading “benefits”. These
include improving job security and
the quality of life to attract and
retain the right demographic of
younger generation talents, who
have already become central to the
economy of a country.
THE GLOBAL MARKET CYCLE
According to Knight Frank head of
commercial researchDr Lee Elliott,
there aremixed signals market
observers have picked up eight
years post the financial crisis.
These include:
the complex intersection of the
economic cycle locked in a rhythm
of low growth;
the business cycle which is highly
variable evident in corporate
cautiousness and selective
investment by businesses which
has fuelled demand in global real
estatemarkets;
a property cycle relating to real
estate supply and demand; and
a property cycle relating to
capital flows and their impact
on pricing.
“On the whole, there is confusion
and uncertainty in themarket with
somuch change taking place.
However, there seems to be a drive
in rental growth as the cyclemoves
forward. This appeals to global real
estate investors who are already
attracted to the relative out-
performance of real estate assets in
a low interest rate and lowyielding
economic environment,” Elliott
states in his article. His overall view:
“There is road to run in 2017”.
On the whole, lifestyles are
changing, quick is getting quicker,
markets are exciting in areas that
attract the key demographic of
creatively skilled talent deemed
“highly-prized commodity”. Where
there is this pool of people, there is
population growthwhich leads to
themushrooming of global cities.
Infrastructure also has a role to play
where global cities are concerned as
“they act as the lines that join up the
real estate dots” reads an article in
the Knight Frank report. Andwith
the lifestyle of themodern
millennial, living in an all-
comprehensive “cubicle within a
tower – live-work-play/mixed-use
development/buildings with beds”
isn’t such a fantasy anymore as all
one’s wants and needs are basically
a “screen-touch and hop, skip and
jump” away.
Followour column next week
withmore insights on global cities
and lifestyle trends altering the real
estate industry.
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24 theSun ON FRIDAY | FEBRUARY 17, 2017