One of the questions from the audience at the annual ULI conference in Paris this week was whether there will be a third world war.
Just 12 months ago, that question would have been inconceivable at a real estate conference, as Francois Trausch, chief executive of Allianz Real Estate, pointed out during a panel session later in the day. But then again, a year ago only a small percentage of the audience polled in the room thought that Donald Trump had a chance of getting into the White House and that the UK would vote to exit the EU.
I belong to the majority who got both those scenarios wrong.
Somewhat worryingly, the chances of a war in the foreseeable future were not ruled out altogether in Paris. But the greater reality today is that a period of great uncertainty lies ahead for Europe - and indeed the world - now that the pillars of the liberal international order created by the West in the 20th century are subsiding, Dr Robin Niblett, CMG, director of Chatham House, noted in an opening address.
‘Global risks such as rising nationalism, violent radicalism and mass migration are the biggest challenges Europe faces today,’ he said in a fascinating presentation to set the geopolitical scene.
Trump’s motto America First and the further stalling of the EU as ‘the benchmark of the liberal international order’ since Brexit are just half the picture, Niblett added. ‘It’s the uncertain uncertainties that we have to worry about.’
The rise of new challengers
Niblitt described in some detail how the rise of new challengers including China, India, Russia and Iran were undermining the pillars of the liberal international order. The key question that lies ahead is whether liberal and illiberal states will be able to get along. ‘Can they agree not to change each other but to find a way to get along? I think we are heading for a period of uneasy co-existence.’
Thankfully, he ended his presentation with some positive news. ‘The realities of interdependence are here to stay. Middle classes have emerged everywhere in the 20th century. That has been the biggest phenomenon, that populations have caught up with GDP growth.’
While Niblitt’s address on geopolitical risks certainly set the scene, the topic did not dominate all the discussions during the conference. Indeed, most of the panel discussions were devoted to other global trends that are affecting our urban environment and which will continue to have an impact for decades to come.
Lack of affordable and suitable housing remains one of the biggest challenges facing European cities and demographic changes will exacerbate the situation in the coming decades, Prof. Sarah Harper, director of the Oxford Institute of Population Ageing at the University of Oxford, said during her address to the conference.
The ongoing process of urbanisation and a demographic ‘time bomb’ are creating new demands, she noted. ‘Over 50% of the global population now lives in cities,’ she pointed out. ‘That will rise to 75% by the middle of the century and 90% by 2100. That is a huge transformation.’
From pyramid to skyscraper
Another big demographic trend that will affect the type of housing we need worldwide is the ageing of the population, she added. ‘In a few years’ time, half of the world population will be over 50. Some people think the population is growing out of control, but in fact it is stabilising and the rate of increase is reducing. With the exception of sub-Sahara Africa, two-thirds of the world population is now at replacement level. A bigger trend is that demographically we are no longer dying on time. Population growth over the next 20 to 30 years will be driven by longevity.’
In the past, the pyramid was an apt visual symbol to represent demographic statistics but with the lengthening of life spans, a skyscraper captures the trend much better, Harper said. ‘Demographically, we’re seeing the biggest growth among the over-85s.’
A key question in that context is whether real estate investors are building enough senior housing and more generally the right type of product, as Sophie van Oosterom, CIO of EMEA at CBRE Global Investors, pointed out during a panel discussion focusing on capital markets.
Listening to Van Oosterom and Harper in their two separate panel discussions, what struck me was that there were at least as many women as men behind the table. In fact, the women dominated the opening panel and only one session was all-male.
What does this tell us about the demographics in terms of male-female representation in the real estate sector? The sub-text of the latest edition of the ULI conference in Paris seems to be that the uneasy co-existence of the genders in the European real estate industry may be a thing of the past.
Judi Seebus
Editor-in-Chief