CHANGING WORLD

I recently gave a keynote presentation for the ‘Expert Meeting’ at Nyenrode Business University in Breukelen, Netherlands. The Dutch area developer AM organised the event for investors and government officials, and timed it to take place just after the Dutch national Budget Memorandum. ???In our discussions, we addressed how public and private sectors could merge interests to address spatial development and the local real estate market. If nothing else, this was an example of the Dutch-style ‘Polder Model’ in action.?

CONTEXT

In my presentation, I outlined broader context beyond the shorter term pressures of the pandemic, the war in Ukraine, recession, and inflation.??

Rise of Cities - The economic power of urban regions will outstrip the influence of nations, and we may expect the emergence of more state capitalism as a reaction.

Climate Change - Major climate events and local adaptations will cause more territorial-scale risks, costs, and population dislocations.

Demographic Transformation - We are living longer and migrating more frequently. These changes shift our sentiments and expectation as citizens.

Technological Revolution - Predictive operations, platform economies, a subscription services will continue to overtake traditional forms of asset ownership.

In general, these conditions will progressively blur the distinctions between physical assets, infrastructure, and digital technology.?Unfortunately, these conditions are also likely to increase social polarization and challenge the existing social contract.

STRATEGIES

I suggested some public-private cooperations that are relevant to the Dutch real-estate sector.

Get Bigger - Accelerate transport and economic links along the strategic corridors to urban conurbations withing the ‘Blue Banana’ – the territory that extends from the UK Midlands and Greater London through the Benelux states and the German Rhineland, down to Switzerland (Basel/Zurich) and Northern Italy. This population cluster of over 110 million will emerge as a new ‘Hanseatic League’, well-positioned to compete with other mega-city regions globally.

Requalify Land - Continue to convert underperforming brownfield lands in urban areas to more productive uses.?This includes delivering high-density mixed use around transportation hubs and relocating/developing specialised industries in optimised areas. ??

Create Public Domain - Local municipalities increasingly struggle to fund, build, and operate public systems.?Partner with local governments to obtain development flexibility and offset risk in return for planning, delivering, and operating public parks, transportation, and social services.

Predict the Future - Develop digital twins for large-scale urban systems to test and optimise the construction, operation, and governance of regions, neighbourhoods, and assets. The Dutch digital models can become valuable ?exports to other regions.

CHALLENGES

Beyond current conditions, I also outlined a couple of existential challenges that are likely to fundamentally shift development dynamics globally.?

Changing World Order - Every successive great power goes through predictable arcs of influence. The Netherlands crested as a global power in the 18th century after the fourth Anglo-Dutch wars.?The British empire lost its reserve currency status after the 1950s Suez Crisis. The US is in a late stage of its own long-term debt cycle with bursting indebtedness, printing money, exposed to large internal and external conflicts, and rapid collapse of wealth and political systems. Ray Dalio outlined these cycling fortunes in ‘Changing World Order’; will China soon become the dominant economic culture and hold the global reserve currency? ??

Climate Migration - As the climate warms, every 1 degree increase of global temperatures over the existing baseline will induce approximately 1 billion people to migrate out of affected areas concentrated around coastal and equatorial regions. Dr. Parag Khanna outlined the emergence of the ‘Climate Oasis’ in his recent book ‘Move’.?He anticipates a number of socio-economic scenarios that mitigate the effects of mass migration; will we develop urban resources in the Arctic Mediterranean to absorb vast new populations, with international agencies enabling seasonal migration? Or will we enter an age of neo-feudalism with stable city regions bulwarked against chaotic provincial decay and climate migrants?

SOCIAL CONTRACT

Whatever the context, strategy, and existential challenges, what language will we use to redefine the shifting social contract? Will we move from philosophies that typically emphasize social justice and libertarian freedoms to more utilitarian positions that define the most value for the greatest number of people – even if we admit that some parts of society will inevitably be left behind?

Nyenrode professor Prof. dr. Tom M. Berkhout MRE MRICS ably moderated the group breakout discussions and outlined the underlying consensus and differences in the room’s sentiments.?It will be interesting to see how the insights gained during the discussions translate into action over the coming year.