Digitisation, Debt and Developers

By Richard Pickering, Head of Futures Strategy

Local council elections   Last week the nation went to the ballot boxes in 150 Local Authority areas. The result was a rather underwhelming increase for Labour, taking a net 77 new seats. Of note, London shifted noticeably to Labour – 65 new seats) whilst the Shires balanced the position somewhat. What can we learn from this? Aren’t local elections about value for money in delivering local services? The evidence suggests not. Local election voting patterns are typically tied to national politics (not many people vote for different colours nationally and locally) and so can predict General Election voting patterns. On that basis, might we infer small gains for Labour next election? In fact, the bookies have downgraded Labour, putting both parties on evens. Why? Firstly, only about 20% of Local Authority seats were up for grabs, so we haven’t seen the full national picture. Secondly, the local voting data is more granular, so we see small shifts that wouldn’t impact on a first-past-the-post vote in non-marginal constituencies. Thirdly, perhaps some voters wanted to give the Tories a black-eye over Brexit (too soft or too hard), which won’t materially affect their long-term allegiances.

Digitising democracy   For the first time, an element of the electorate were required to produce a form of identification prior to voting. Strange that you need ID to buy alcohol, and yet you can vote for the future of the country without a shred of proof about who you are. In this we lag behind the likes of Ghana who have used biometrics for the past 6 years. Requiring voter ID is a step towards digitising our democracy, which rather than suppressing the ability to vote, should eventually drive engagement and open up new possibilities. Planning is one such area. Using digital identities to target people affected by a decision, or who should be stakeholders to a consultation exercise will allow planning authorities to make better, data-backed decisions. Furthermore, public access to previous digital consultations will allow developers to gain stronger insights into local issues and help to derisk the planning process. Another area is taxation. Studies show that where taxpayers are given agency on how their taxes should be spent (e.g. through digital submission forms) tax compliance rates rise.

Rail fares and rents   The costs of travelling (both actual and indirect) have a significant bearing on the value of property. The more it costs to get where one needs to go, the less the demand is to go there, lowering the rent potential at both ends of the journey. From rail operators’ perspectives, the more demand there is to travel at any given time of the day, relative to a scarce supply of trains, the greater the price that can be charged for tickets; hence we have ‘peak times’. Recognising this position, and wanting to attract the best talent, workplace policies have become more flexible so that employees can avoid peak time travel. However, this doesn’t help someone who buys a season ticket (and so commits to the maximum cost) regardless of whether they work one day at home or occasionally arrive late in the morning. The Rail Delivery Group has this week launched a review of ticketing aimed at automatically offering the customer the cheapest fare using more sophisticated systems. If new rules are adopted, and transport savings are the result, then the savings and benefits should flow directly to real estate, and to a more satisfied workforce.

Digital Twins   In the physical world resources are scarce, and scarcity means cost. In the digital world the cost of building things comes in the design, not in materials. A recent report by Deloitte points to the growing prevalence of ‘Digital Twins’ – exact copies of real world objects created digitally. These can be used to prototype, test and model scenarios more accurately and at much cheaper cost than physical models – very useful in plant heavy industries. As the design and development of buildings increasingly moves away from CAD plans and towards virtual environments, and as IoT sensors are installed in buildings, the accuracy of replicating our real estate will only improve. It feels inevitable that we will have digital twin towns, where we can carry out our planning activities and city design. And when these are sufficiently progressed, these information systems will be the natural home for all property data, with layers for ownership, policy, taxation, building usage statistics and environmental impacts. Whether we might one day elect to live in a VR version of this digital twin is debatable.

MAGA  If a billionaire real estate tycoon can become a celebrity and then a President, why shouldn’t a multi-millionaire celebrity become a real estate tycoon? Having recently declared his backing for Mr Trump, Kanye West might have been feeling inspired as he announced his new venture ‘Yeezy Homes’ – a bid to Make Architecture Great Again? The multi-talented rapper has set his sights on being ‘one of the biggest real estate developers of all time’, doubtless creating significant concern of disruption among the established development community. They say that to be a good developer you need self-confidence, and this could be a challenge for the demure West. Rating himself as only ‘50% more influential than any human being’ and citing his biggest pain in life as never being able to see himself perform live, he may lack the ambition to succeed in property. Nevertheless, don’t count Kanye out – he is wise beyond his experience: ‘If you read books – which I don’t, none at all – about how to become a billionaire, they always say you learn more from your mistakes’. So, there you have it.


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