Skip to 0 minutes and 10 seconds Hello. I’m Kathy Pain. I’m the Professor of Real Estate Development in Real Estate and Planning in the Henley Business School. For anyone thinking of being involved in the real estate industry, globalisation is incredibly important. It’s changed the whole game for those who are active in the industry. There are two big megatrends, global megatrends, that I’d highlight. The first one is to do with economic change, and that’s to do with ICT-enabled economic change, which is around the fact that we’ve changed from an industrial revolution to a knowledge revolution. And in that knowledge revolution, real estate is a big player, a big contributor to the knowledge that we now need in a very global and integrated economy.
Skip to 0 minutes and 57 seconds So, alongside this knowledge revolution, what we’ve seen is a change from jobs in manufacturing production to jobs in the service economy. And, obviously, real estate is one of those service economy providers. As the economy has changed globally, rural population has diminished employment. And so there’s been a big surge of rural to urban migration, and that means that cities around the world are getting bigger. Rural communities are shrinking. And the knowledge-based workers in cities are increasing. Due to globalisation, real estate has become more international, but it’s also become more financial. So we call that internationalisation of real estate and financialization of real estate.
Skip to 1 minute and 48 seconds Firms that might be clustered and very highly represented in a global city like London will also have other offices around the world in other important global cities. So, the cities are networked through the services that they provide. And at the same time, real estate is interconnecting those cities through flows of finance associated with real estate. So through the flows of information and knowledge that real estate helps to deliver, we also see flows of finance capital that are being enacted and allowed through the role of real estate service providers and their interconnections with financial services.
Skip to 2 minutes and 31 seconds In fact, it’s not unusual now for people working in the real estate industry to require some kind of financial training in order to be able to do their job effectively. So it’s a very global world. Real estate is not only much-affected by it, but it’s actually a key part of globalisation. There was somebody called John Freedman, who was a planner, who in 1986 did some research on what he called the world economy and the positions of different cities in the world within that economy. And his map is terribly outdated now.
Skip to 3 minutes and 7 seconds So Shanghai and Beijing actually, even in 2000, were only listed amongst the top 30 cities in the world in terms of their importance in terms of business and financial services. So those are the important value-adding bits of the new economy. Whereas today, they’re ranked 5 and 6 for those services. And when you consider the fact that Hong Kong is now also a global city located within China as a nation-state, we see three top world cities of great interest for the real estate industry all in one country. It’s the only country in the world that’s got more than one important world global city.
Skip to 3 minutes and 50 seconds In the next 20 years, every year China will require between 1.6 and 1.9 billion extra square metres of residential and commercial space. So that’s every year for 20 years. It’s an astonishing statistic. So we have now a very complex environment that’s about the internationalisation of real estate and also the financialization of real estate. So thinking internationally, thinking financially are very important dimensions of real estate in terms of how you come about studying it, the research that’s being done in this area, and also the ways that you will need to think about real estate when you go out into the industry.
Academic perspectives on globalisation
Watch Professor Kathy Pain, Professor of Real Estate Development at Henley Business School, discuss the academic perspective on the implications of globalisation for real estate investment and development.
If you go on to study real estate at university, these are the kind of issues you would study and research yourself. Research skills are increasingly important for effective professional practice in the world of global real estate and there are research teams analysing what globalisation means and how the real estate sector should respond and adapt.
You can explore the research on ‘global city networks’ in more detail on the Globalisation and World Cities Research Network website, whilst a summary of a section of the work is provided next.
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