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A wonderful uncertain future
14 June 2019 | António Gil Machado - Iberian Property's director

The SQUARE event challenged a hundred real estate market decision makers, during the last 5th and 6th of June, at the inspiring atmosphere of Ibiza.

Foto

 

Josep Maria Pons is a veteran at organizing events, having organized Symposiums at the Barcelona Meeting Point for 20 years. With the support of Merlin, Azora and Savills, Josep Maria offered us two exceptional days!

 

Between the apocalypse and the vision of a bright future

An apocalyptic vision from Daniel Stelter, German economist who worked at renowned American consultant BCG – Boston Consulting Group and who introduces himself with the blog “Beyond The Obvious”.

Daniel Stelter’s thesis is simple. We keep living in a pyramid of debt which is not sustainable and which will lead us to a new financial crisis not even the Euro will be able to survive.

While families and SMEs were forced to reduce their debt, the main European countries were unable to nominally reduce their debts and the large European companies didn’t fare much better. Public debts managed, at best, a slim reduction concerning the GDP, but keep growing nominally.

The intervention tools at the disposal of the monetary authorities can’t be used anymore, with the ECB’s reference rates already at negative levels and with huge problems in terms of the provision of liquidity. In a word, faced with a new financial crisis, the situation will be worse than before, because there are no more monetary policy tools that can be used.

Daniel Stelter made a brilliant analysis of the connection between the economy and the current political situation. In a simple analysis, the income of an average European or American worker hasn’t stopped falling during the last 30 years. Since the 80’s an average family has increasingly lost purchasing power, with a growing gap between the rich and the poor. Furthermore, it was the European middle class that was most affected by the financial crisis, with more unemployment, the freezing of salaries and the pressure to reduce the debt. We thus have a cosmopolitan elite that lives in the big cities and a more rural and suburban middle class, which is poorer and angrier.

All this explains phenomenons such as the Brexit, Donald Trump’s election and the rise of political parties outside the traditional political spectrum. According to Daniel Stelter this movement is just beginning and, fed by a new financial crisis, it will trigger a drastic change in Europe.

What about the good moment we’ve been living in during the last five years? According to Daniel Stelter there is a simple explanation. The boost in the Chinese domestic demand represented an «oxygen bubble» for the German industry, which has a spillover effect over the European economy. This Chinese growth engine is cooling down and the German economy was immediately on the brink of recession… due only to the fact that Chinese imports stopped growing!

What are the foundations that support the European economy’s growth? Within a negative demographic scenario and with restrictions to emigration, there is no demographic dynamic to support the economy. Productivity has had a positive contribution, but too feeble to provide a sustainable economic growth.

 

Or a bright future...

On the antipodes of Daniel Stelter we find Howard Sauders, who presents himself as a “Retail Futurist”. His proposal is to read today’s signs and anticipate the near future.

Howard Sauders has no doubts. We have the best quality of life and are the happiest humans who ever walked the surface of this planet. We never had such good health, lived as long, had less wars and conflicts, less crime, been better informed, more connected! In a word, we never had so many reasons to be happy and we were never been so accepting of a grey future!

Saunders believes that technological evolution hasn’t stagnated, but rather is accelerating fast with a growing impact in our daily lives. There is research being implemented right now which will change the way we live and connect with each other.

Electric mobility is on our doorstep, it’s already happening, it’s no longer a promise for the next generations. Artificial intelligence and automation are entering our homes and our companies. We will need less workers, we will have more unemployment among the blue collars. On the other hand, we will have a society with much more leisure time, and Saunders promises a spectacular evolution for the creative industries. From leisure to culture, we will multiply the amount of creative jobs exponentially, by creating increasingly more intense experiences.

Howard Sauders is a man who made a career as a consultant for some of the largest retail companies, directly impacting an audience of real estate professionals. The magic word is experience. The commercial areas are reinventing themselves to become areas for culture, to meet up and to be experienced. They are no longer mere zones for consumption, they are becoming places where a population which has more and more available time can meet up!

 

And real estate....

Signs of the times, all the players of the new economy were present at Ibiza.... Airbnb, Expedia, WeWork, A&O Hostels, The Student Hotel. All these new players promise to revolutionize the real estate market through the impact of technology. New concepts for Generation Y, as defined by Lousie Morrisey from IPSOS and following the same line of thought Lara Marrero da Gensler.

The new generation which is now reaching 20 years old, was born in the new millennium has new attitudes towards life and was the first to be born connected. It is this generation that in the next 10 years will build a family, buy a house, a car.… or maybe not!

What about the real estate investors, faced with this situation, what will be their attitude towards a changing world? Sabina Kalyan, Head of Global Strategy at CBRE Global Investors supports a more prudent vision. But, at the end of the day, the conclusion is simple. If we are in a business, we need to keep moving forward, we can’t stop!

It is within this mixed feeling, of a very finance driven view, faced with a more holistic and optimist view of the world that we find the guests’ points of view... for now, we are all in the business of “business as usual”, anticipating opportunities created by technology and following our path!

Good deals!