Do or die

June 6, 2014 admin

I was going to write something about the recent European Parliament elections, the rise and rise of the “eurosceptic” parties, and the usual jockeying and shilly-shallying for positions and national prestige in the new European Commission. But you don’t want to know about that.

I’ve just finished an article for the July/August issue of The Institutional Real Estate Letter – Europe on global cities. It wasn’t a place for saying which will be the world’s top city in 2030 — that moniker depends on many variables. On GDP, it’s Tokyo. On population, it’s Jakarta. On the projected change in GDP to 2030, it’s New York City. On the projected change in population to 2030, it’s Lagos. If you want to know more about the world’s top 750 cities and their relativities, get Oxford Economics’ recent Global Cities 2030 report.

A lot depends on the sector and parameters you pick. Reports on global cities and the place of real estate are not just the preserve of the institutional investors who are IREI’s principal target audience. A recent article in this blog space detailed the findings of the Candy GPS Report, produced by Candy & Candy in association with Savills and Deutsche Asset & Wealth Management.

From the perspective of ultra-high-net-worth investors, we read that the top 12 cities-on-the-rise in the world include the usual suspects like Chicago and Melbourne but also some unlikely names like Beirut and Panama City that would not normally feature on institutional investor shopping lists. That’s primarily because the report was looking at UHNW investor views on prime residential property prospects, and such investors see things in other ways.

For UHNW investors, price — and therefore price performance, also known as value for money — is not a principal criterion; it’s being invested full stop and preferably in a capital-preservation and we-can-live-there-if-we-have-to way. The recent sale of the 1,486-square-meter Penthouse D in the luxury One Hyde Park development in London to a Russian or Ukrainian investor (there is still a difference) for a reported record £140 million ($235 million/€172 million) — or £94,213 ($158,400/€116,000) per square meter, and that on a core-and-shell basis — tells you all you need to know about that investor’s views on the prospects for his home country and the merits of keeping the money in the domestic market.

Talking of UHNW investors, another way of ranking the top global cities, and one used by the Sunday Times in its 2014 Rich List, is by counting the number of resident billionaires. On this basis, London came first, with 72 sterling billionaires; Moscow second, with 48; and New York City third, with 23. Billionaires are not IREI’s and our publications’ market, but billionaires are fast movers, and where they operate institutional real estate investors and other recipients of billionaire largesse, liquidity and fleet-footed money-making activity often follow.

Let’s not forget that none of this free-market expression and all that it entails would be possible if we hadn’t won the war. By “war”, I mean the Second World War; by “we”, I mean people on all sides. Totalitarian, command societies — whether left or right — are not pleasant ones. We would have had radar, jets and nuclear weapons even if we hadn’t won the war, but would we have had electronics, computers and smartphones? Moon travel?

Today, June 6, 2014, is the 70th anniversary of D-Day, the invasion of France in 1944 by Allied forces and the start of the final push to victory against Nazi Germany in the Second World War. Gaining the beachhead in Normandy on this day 70 years ago was a tremendous military and logistical achievement, and we are unlikely ever to see its like again.

Nor do we want to. The European Union and its various constituent elements should recognize that the recent European Parliament elections were a clear signal from the people of Europe that they are not happy with the state of Europe, in all senses. If the E.U. chooses not to reform from within, some people might begin to think they can do better without.

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RichardFlemingRichard Fleming is editor of The Institutional Real Estate Letter – Europe.

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