In yesterday's post about bottom-up urban development, I mentioned (in parentheses) that the focus on regenerating local economies is arguably even more important in the context of Japan, where a shrinking population is creating urban decline in many communities. And the reason I said this is because it is widely known that Japan has a demographic problem.
Since 2009, the country has seen its population decline every single year. Currently, it is hovering at just over 120 million people, but by 2050, it is expected to fall to roughly 100 million (or lower), with people aged 65+ accounting for nearly 40% of the population.
When this is your backdrop, you're usually more concerned about urban decline than you are about building enough new housing. As Fred Wilson mentioned in this recent post, "pressing issues like the unaffordability of housing, for example, can quickly change if we are living in a shrinking world, not a growing world."
Of course, it's not just Japan. The global fertility rate (as of 2024) stands at around 2.25 live births per woman. This is not that much higher than the replacement level of 2.1, and it's being largely propped up by only one region: Sub-Saharan Africa (>4 births per woman). Remove this region, and the world is now already shrinking in population.
This will have dramatic consequences not just on our cities and real estate markets, but on the global economy as a whole, which is why some people, like venture capitalists, are already betting that the world will need to move from labor-bound to energy-bound. What this means is that we're going to need a lot more energy-consuming tech to compensate for the fact that we have less of the other stuff.
You know, humans.

The first time I ever used dial-up internet was sometime in the 1990s. Some of you will remember that a company called CompuServe used to mail out floppy disks with "10 free hours." And I still remember the feeling of amazement the first time I tried it. Suddenly, I could chat with people from around the world. Remember a/s/l? It was so enthralling that those 10 free hours certainly didn't last very long.
Fast forward to more recent times, and I got that exact same feeling of amazement when I started diving into crypto. The first time I created a wallet, logged into to a service (using only the wallet), and then transferred funds around, I thought to myself, "Wow, this is a fundamental shift in how the world works." A lightbulb went off. And I still feel this way about crypto, which is why I remain long ETH.
But now I'm also excited about AI (along with the rest of the world). With every new model release, it gets that much more impressive. Last week I wrote about Gemini 3 and, since then, I decided to cancel my ChatGPT subscription and move all my activity over to it. I'm sure that a better model will get released before we know it, but for right now I'm having a lot of fun creating just about everything.
Here's a cartoon isometric of Toronto that I prompted to include "landmarks" and the day's weather.


In case you missed it, Google released Gemini 3 this past week. And boy is it awesome. The images it creates —
Here's a photo of a woman standing in the middle of a street in Tokyo wearing a trench coat and holding an umbrella. My prompt also asked it to make it look like a "grainy digital photo."

And here's a knolling shot (new word I just learned) featuring the gear of a global citizen (or globizen if you will). I prompted each of the objects, down to the white panel on the Blue Jays hat.

It's not perfect. Text remains an issue. If you look closely at the front of the passports or the text on the Fujifilm camera, you'll see that it's AI. But it's only a matter of time before this goes away. These kinds of images used to require a lot of time and effort. Now I can create them with one hand on my phone while I'm eating a bowl of cereal and having a morning coffee. There's zero marginal cost.
Thank goodness I've got more than 10 hours of usage.
I know we all know this, but it's hard not to keep thinking about how profoundly this is all going to change the global economy. Let's take real estate development. Development is a future-oriented business. It's about imagining what the future could be, and then going out and trying to create it. Because of this, I think you could also describe it as an industry of visual persuasion. Renderings, photos, diagrams, and many other tools are used to sell a specific kind of future.
In the olden days, these tools used to cost a lot of money, especially if you were preparing for something like a condominium sales launch. When it came to renderings, we used to have to book the best companies months in advance, and then once work actually started, it would take several weeks of iteration before the final renderings were ready. In parallel to this, you'd also be working on your photography. And because no developer wants to photograph dormant winter trees and sidewalks shellacked in road salt, you also needed to carefully plan ahead for when you'd be taking these.
Then, once you had all your visuals ready, you sent them off to the printers, so that sales brochures and other marketing collateral could be physically printed. It's a long and expensive process. Of course, AI collapses this entire workflow. It dramatically reduces both time and cost (down to an almost zero marginal cost), and opens up a world of unlimited visual possibilities. Want a photograph of a couple walking in New York City in the snow during Christmas? Done.
So what does this mean for development and all of the service providers who help to visualize projects into existence? In my view, it means the low-value-add ones go away. AI easily replaces them. But for the high-value ones who bring incredible creative direction to projects, I think they get better and become even more important. AI is creative rocket fuel. But you still need someone who can direct, who has taste, and who can decide what story the project should tell.
Cover photo by Serhii Hanushchak on Unsplash
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