World property: Introduction; inclusive capitalism; room sharing; affordable Australia; blanket view; Brexit waves; Russia expands

An introduction to a different look at world property, politics, economics & finance

Introduction
Fund manager writes about inclusive capitalism
Will room sharing become more common?
Research on delivering affordable housing
Hotspotter on how many in media get Australian residential wrong
What’s Brexit got to do with us? The waves are spreading
Russia expands influence in all directions

Introduction

This introduction to World property on Wednesdays is about a revised version of my coverage of world property (which had lapsed), economics (highly important to gauge our place in a rapidly changing international scene), politics & finance (where the money’s moving).

2 of today’s items are about events in faraway places with potential consequences for New Zealand. Both happen to be from Asia Times columns, but you can expect a wider spread of sources.

You can read thousands of lines every day about US President Donald Trump, but I’ve found very few of those articles read between the lines.

You can also read thousands of lines every day about what China is doing, what the US wants to do to it. After the shouting, I want you to be able to read, here, what seems to be happening that will bring change internationally, and potentially to New Zealand.

Aside from those major economic earthquake lines, large players in property are creating new plays and entering new markets. Their actions may give you ideas on economic activity, financial positioning & investment directions that aren’t just “over there” but also frequently relate to “down here”.

My previous World property items didn’t attract the audience I thought they deserved, perhaps from presentation rather than content.

The new version will contain a wider mix of items, plus links to stories that I think pierce the fog and will help you understand changes in influence likely to impact on New Zealand in some way.

In property, I think it’s worth understanding some of the new kinds of transaction being carried out in various parts of the world – for example, residential portfolios in Europe, reits (real estate investment trusts) of different sizes frequently offering opportunity in one country to investors in another, the investment moves of Singaporean, Chinese, US & European entities in other economies, the Chinese role in Australian development.

At the moment, the Trump challenges to world order as it was are bringing realignment going far beyond his narrow trade aspiration (‘Play fair, all you other people!’) & aspiration for the US to retain global control. It’s important, from the New Zealand perspective, to see relationship challenges such as 5 Eyes versus Huawei – very hard to sit on both sides of the fence.

Health warning:

These items are in a form that you can flick through quickly. But they also have numerous links to sources, including original research, so you can spend time digesting the content.

In today’s first batch of items:

Fund manager writes about inclusive capitalism

Nigel Wilson, who heads giant international funds manager Legal & General Group Plc, wrote in Forbes magazine last July: “Never has there been so much global capital. Never has money been so cheap and yet so poorly used. Some $US8 trillion is earning 0% or less, alongside massive infrastructure underspend & no growth in real wages: a poor societal outcome.

“Since the global financial crisis, our capitalist system has created extraordinary, but exclusive, wealth & its flip side: cynicism & resentment.  The ‘financialisation’ of business has driven underinvestment, widening the disconnect between Wall St & Main St and giving impetus to the dismal economic doctrine of ‘secular stagnation’…

“This article is going to take a close look at the idea of inclusive capitalism – what it is, how it can be defined, some positive signs of its emergence and will provide actual examples of it, hard at work.”

Dr Wilson is group chief executive of Legal & General, which manages $US1.4 trillion of investments. In 2015-16 he was a member of then-UK prime minister David Cameron’s business advisory group, about which he wrote: “The experience helped inform my thinking on how capitalism can broadly benefit society. The approach advocates for using capital to engender conditions in which people can create their own success. This is essential if we are to create a fairer society that empowers people and enables all boats to rise.”

In a separate piece on the company’s blog in November, Legal & General advanced Dr Wilson’s July argument in Forbes, looking inside the tertiary education system and finding a flaw to be fixed: “Innovation & new businesses go hand in hand, so why do universities in the UK & US struggle to build on students’ ideas? By installing an inclusive capitalism mindset we can boost the economy, nurture talent & build communities.

Links:
Nigel Wilson in Forbes, 29 July 2018, Inclusive capitalism: Oxymoron or the perfect balance?
Legal & General blog, 29 November 2018: University challenging: how inclusive capitalism breeds innovation
30 April 2018: Legal & General launches affordable housing arm (GB)
Legal & General

Will room sharing become more common?

2 Sydney academics, Zahra Nasreen & Kristian Ruming, wrote in a guest post in Property Observer in January: “The proportion of households experiencing rental stress is on the rise across Australia’s major cities. High rental prices have been driving an increase in shared housing. The most extreme form of this is ‘shared room’ housing – where residents share a bedroom or partitioned living space (such as lounge room or garage) with a number of unrelated adults.”

Their full research paper can be reached via Taylor & Francis Online. Taylor & Francis is an academic & professional publisher, and a subsidiary of Informa UK Ltd. The group parent, Informa plc, is a business intelligence, academic publishing, knowledge & events group.

Links:
Property Observer
Property Observer, 18 January 2019: Tracking the rise of room sharing & overcrowding, and what it means for housing in Australia
T&FOnline, 24 December 2018: Room sharing in Sydney: A complex mix of affordability, overcrowding & profit maximisation
Taylor & Francis
Informa

Research on delivering affordable housing

3 other Australian researchers focused on Melbourne in their paper, also available in T&FOnline, on whether the marketplace as it is can deliver quality affordable housing. The paper is by Melbourne University academics Andrew Martel, Carolyn Whitzman & Alexander Sheko.

They wrote in their abstract: “Australian government housing policy relies on the private housing industry contributing to the supply of affordable & social housing in cities. However, the diminishing availability of suitable housing for many households raises the question of whether the private housing industry is interested in, or capable of, catering for this market segment. Engagement would require both inducements & regulation, partnerships with government & non-profit actors, and an alignment of attitudes regarding the need & responsibility for providing dwellings in housing submarkets. This paper explores perceptions & strategies of actors regarding the role for the industry in the context of Melbourne.”

Link:
T&FOnline, 24 January 2019: Private developers & the public good: Can a socially constructed market deliver quality affordable housing for Australian cities

Hotspotter on how many in media get Australian residential wrong

Terry Ryder, founder of hotspotting.com.auand an astute observer, wrote a column 18 months ago about Australian property markets that’s just as relevant today: “Much of what appears in mainstream media about residential real estate discusses Australia as a single market. That’s an early clue for consumers that the commentator has shallow knowledge.”

Links:
Property Observer, 24 July 2017: As Sydney fades, Perth shows early signs of recovery: Hotspotting’s Terry Ryder
Hotspotting

What’s Brexit got to do with us? The waves are spreading

UK researcher Hannah Timmis wrote in Asia Times on Monday: “As the UK heads towards a possible ‘no deal’ Brexit, the uncertainty surrounding the terms of the UK’s imminent departure from the European Union is making waves as far away as South-east Asia.”

Ms Timmis wrote in her work blog at the Centre for Global Development: “New research shows trade-reliant poor Asian nations will be especially hard hit if the UK & EU can’t come to terms on their separation.

“A no-deal Brexit would deprive some developing countries of tariff-free access to the UK market. Under the worst-case scenario, developing countries could suffer a $1.6 billion or 5% decline in their UK exports, with least developed countries among the worst affected. To minimise the damage, the UK government must prioritise legislation that would maintain preferential market access for developing countries.”

Ms Timmis is a research assistant at the Centre for Global Development, supporting Mikaela Gavas’ work on development finance & European development policy. Her previous work includes being a project manager in the Middle East & North Africa, overseeing the delivery of aid programmes. She holds an MSc in development management from the London School of Economics and a BA in philosophy, politics & economics from Oxford University.

Links:
Asia Times, 11 February 2019: No-deal Brexit could sink much of Asia
Centre for Global Development, 25 January 2019: Why a no-deal Brexit would be bad for developing countries
German Development Institute briefing paper, February 2019: How Brexit affects least developed countries

Russia expands influence in all directions

In the second Asia Times piece, Alexander Kruglov examines Russia’s changing world roles under President Vladimir Putin: “Russia is going head-to-head with the West as it pursues Eurasian integration and expands its footprint globally.”

Link:
Asia Times, 11 February 2019: Gas, guns and pragmatism: Putin’s foreign policy

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