The predominant theme in the West, or rather in the ‘old world’ – the pre 20th century cities of North America, Europe, Australia and Japan – has been the rediscovery of the city. Since the 1990s, patterns of depopulation dating from various points in the 20th century have been almost universally reversed in these old cities and businesses of many types have once again created revenues and wealth after previous decades of population decline, and in some cases, urban decay.
The shift in city economies during the mid-1980s away from manufacturing and toward financial and business services made the location of goods and markets less important and once again put the interactions of people at centre stage. This has given cities a new currency: there is value in human interaction and the marketplaces that cities provide. Little wonder that London and New York rose from the ashes at this time to dominate the world city scene. This economic, geographical and financial phenomenon had big impacts on the real estate industry and these cities remain heavily invested by institutions, funds, private companies and individuals.
In the 21st century, the emphasis on and need for human interaction on city streets is as great as ever. The rise of new technologies and the creative, entrepreneurial and agglomerating industry that has been spawned by them is particularly in thrall to the city. Cities not only allow for the inception, nurturing, funding and development of new ideas and products, but actively provide the human experiences and interactions that spark the disruptors in the first place.
So cities with growing tech sectors would appear to have assured futures, but only if they can continue to attract young, creative and entrepreneurial workforces and residents. Real estate developers and investors need to understand the drivers of city success in these circumstances if their location decisions are to be profitable, and the type of real estate they provide adds to the city’s success rather than detracts from it.
Renaissance or naissance?
It is perhaps appropriate to be looking at city development and expansion in this special US edition of 12 Cities because so many real estate trends have emanated from that country. Not only has the US given the world the first new ‘automobile cities’ zoned and organised around the movement of traffic, but some of the older colonial and industrial-age cities have introduced ‘regeneration’ and ‘gentrification’ to the lexicon of real estate through the repopulation, reuse and reinvigoration of previously run-down inner-city areas.
It is impossible to separate the influx of investment in cities from the influx of workers, residents and visitors; they are all part of the same phenomenon – city renaissance. But in the ‘new world’, especially the emerging economies of Asia, the story has not been so much of renaissance as ‘naissance’ – the birth of whole new cities of a type and scale the world has not seen before, sometimes from the rubble of what was there before and sometimes on rural farmland.
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