What if the metropolis wasn't ultimately the panacea? The assertion of the urban fact has become a palpable reality today. By the end of the 21st century, 85% of the world's population will be urban, compared with just 5% in the 18th century. The metropolization of the economy has gone beyond the economic work of Paul Krugman. While the top 100 metropolises are home to 10% of the world's population, they concentrate 30% of GDP and 75% of real estate activity, as Pierre Schoeffler reminded us this week in a debate at theInstitut Palladio. Despite all these powerful driving forces, the question of how to apply these new models to real estate remains to be resolved.
Take, for example, the Paris region, the economic engine of the world's 6th largest economy, which relies on a world city: Paris. Unless we fall back on a populist and protectionist policy, everything points to the natural attractiveness of this region. But behind the enticing window display, it's the whole store that needs to be organized to avoid having shelves in disarray.
In terms of housing, the Paris Region is a tense area, but the attractiveness of the Ile-de-France metropolis conceals huge disparities between a rich and opulent capital, where prices are soaring and continue to drive out the working and middle classes, and territories that are stalling, with virtually no natural demographic or migratory growth. This territorial asymmetry, highlighted by Gilbert Emont, reflects an increasingly glaring social divide that threatens fragile balances. The coexistence of islands of wealth and pockets of poverty can lead to a rupture. London's wealth didn't prevent the Brexit. It may even have provoked it.
This territorial divide also affects commerce and the office. For retail, we're moving away from a binary vision (e-commerce vs. physical retail) to enter a "multiplicity of balances" at the level of territorial dynamics finely presented by Béatrice Guedj, Director of Research atIEIF, during the Institute's prospective morning. Institutional investors can no longer be satisfied with exposure to a single asset class, however outperforming it may be. They need to get organized and get down to the nitty-gritty.
In the office sector, while rental activity is improving, as evidenced both by the level of take-up (2.4 millionm2) and, above all, net absorption (almost 700,000m2), increasingly marked boundaries are emerging within individual regions. The healthy state of the office market in Paris's central business district masks the major difficulties in the western crescent and the inner suburbs, where it takes eight times longer to sell a building.
As a result, the analytical grids underpinning the markets - at least the territorial ones - are becoming more complex than ever. While capital has become global, real estate is more local than ever. It is even (re)becoming a local business.