Tag: united kingdom

• English-speaking countries don’t like apartments

  A lack of affordable housing certainly feels like a global phenomenon. Companies are trying to 3D-print homes for under $100k. Berlin froze apartment rents back in 2019 because things were getting too expensive. And today, Hong Kong is working on building some sort of “light public housing” in an effort to reduce its massive wait times for new homes.

  But depending on where you are in the world, it might be somewhat comforting to remember that this problem seems to be particularly pronounced, here, in English-speaking countries. Whether it’s restrictive zoning rules or a general distaste for apartments and urban density, the English-speaking world has fallen behind on housing supply compared to places like continental Europe.

  Here’s an excerpt from a recent FT article:

  Forty years ago, the UK, US, Canada, Australia, New Zealand and Ireland had roughly 400 homes per 1,000 residents, level with developed continental European countries. Since then the two groups have diverged, the Anglosphere standing still while western Europe has pulled clear to 560 per 1,000.

  And this shows in our home prices:

  

  One argument is that continental Europe is simply more culturally accepting of apartment buildings, and that allows more new homes to be built. Seems right:

  

  According to this chart, the average person from the UK or the US would not be happy unless they were living in a detached house. When you get to the continent, people start to become increasingly more positive around missing middle-type housing (something in the 3-4 storey range). Though, anything more than that and things get divided.

  All in all, it doesn’t seem to really matter where you’re from, there’s a clear preference for detached housing. But maybe liking apartments even a little bit is all you need to help with overall housing supply.

  2023.03.17

• European cross-border electricity interconnections

  The EU has the following target in place for the sharing of electricity:

  The EU has set an interconnection target of at least 15% by 2030 to encourage EU countries to interconnect their installed electricity production capacity. This means that each country should have in place electricity cables that allow at least 15% of the electricity produced on its territory to be transported across its borders to neighbouring countries.

  The main reasons to do this is that it is good for renewables and it is good for overall resilience. The UK, for example, has one of the largest offshore wind markets in the world. But if it’s having a bad wind year, interconnections allow it to import the electricity it may need — perhaps from Norway, which is Europe’s biggest producer of hydropower.

  Here is what that looked like in 2021 (via the FT):

  

  Of course, this works really well when there’s enough electricity to go around and everyone is cooperating. The question this winter is whether that changes at all.

  2022.11.29

• AI-generated poems at Expo 2020

  Expo 2020 is currently being hosted by Dubai until March 31, 2022. The dates are all misaligned because this year’s World Expo was originally scheduled for last year.

  As is typical of World Expos, countries from around the world participate by building a physical pavilion. Below is a photo of the UK Pavilion, which I thought was really interesting. It was designed by Es Devlin.

  

  The pavilion is a cross-laminated timber structure with no actual exhibits inside. The structure itself is the exhibit.

  As you can see, on one elevation of the pavilion there are a series of displays. These displays are used to show AI-generated poems that appear in both English and Arabic.

  Part of the point is to celebrate the diversity of the UK. But the other point is to bring our attention to the growing involvement of algorithms in today’s world.

  Photo by Ry Galloway and Alin Consstantin, courtesy of Es Devlin and via Dezeen

  2021.10.07

• How meaningful is the exodus from Hong Kong?

  

  When I was in my early 20s, I spent a summer living and working in Taipei and Hong Kong. It was a wonderful experience. I’ll never forget my apartment in Hong Kong’s Causeway Bay. It was a small single room with a small bed and an even smaller bathroom. The bed didn’t fit me — at all — and my legs would hang over the bottom of it. I couldn’t stop hitting my shins on the bottom of the frame at night. The bathroom didn’t have a dedicated shower, just a hose coming out of the wall. So everything would get wet. It also took me 15 minutes the first morning I showered to figure out how to make the water hot. Eventually I got it.

  Despite all this, I remember being enchanted with Hong Kong. Here was this tiny little place with very little developable land that had managed to become, through trade, finance, real estate and other things, one of the wealthiest places in the world. Capitalism! I could also feel the connection to Toronto. Hong Kong has one of the largest Canadian expat communities in the world. In fact, I ran into one of my high school math teachers in a bar in LKF. That was wild. He had moved there with his wife to teach. I suppose because of all of this, I have tended to follow the region a bit more closely.

  Last July, the British government promised a path to citizenship for the 3 million or so Hong Kong residents who hold or are eligible for a British National Overseas passport. This passport, as I understand it, was given to citizens at the time of the 1997 handover. Though I don’t know how utility was actually derived from it over the years. Before last year’s announcement, this document didn’t include the right to stay in the UK. However, now it does. And the UK government expects that some 300,000 Hong Kong residents are going to take advantage of this in the first five years of the program. And indeed, according to the Financial Times, 2020 was the first year since SARS back in 2003 that the region lost people — it had a net outflow of about 39,800 people.

  What will this mean for Hong Kong? Well, Bank of America estimated earlier this year that capital outflows from Hong Kong could reach £25 billion in the first year of the program. But maybe this is being too conservative. Here in Canada, capital outflows from Hong Kong hit a record last year at C$43.6 billion. But this too could be an underestimation, as it doesn’t include transfers below C$10,000 and probably a bunch of other transfer methods. How much money is actually flowing outward?

  This weekend the Financial Times published the above survey results showing sentiment around leaving Hong Kong. Surveys are, of course, a funny thing. Saying you might probably potentially do something is a lot different than actually doing something. But for what it’s worth, about a quarter of pro-democracy supporters (which is maybe half of the population?) responded by saying that, yes, they would be prepared to leave. If you include those who responded no, but that they would reconsider and leave if things got worse, the number increases to about 70%.

  I don’t know how meaningful all of this becomes for Hong Kong. Time will tell. But it has me thinking about my tiny bed and tiny shower in Causeway Bay.

  Image: Financial Times

  2021.05.30

• Housing supply and house price dynamics in the UK

  In the fourth quarter of last year, the average house price to earnings ratio in the UK was about 8.4x. Apparently this is about as high as it has been in the past 120 years. But interestingly enough, if you go back to the 19th century, this ratio was even higher. It was over 12x back in 1845, but then went on a steady decline until about the 1920s. What changed, according to some researchers, is three things: homes got smaller (making them more affordable), incomes rose, and supply increased.

  So what’s going on today? The obvious answer is perhaps that interest rates are low. But in this recent FT article by Martin Wolf, he argues that that’s not really the primary driver. Part of his logic is that low interest rates are a global phenomenon. And so how is it that real home prices in the UK rose 93% between 2000 and 2020, but only 29% in Germany? There must be some other structural force(s) at work. (Germany has a lower homeownership rate for whatever that’s worth.)

  

  Wolf argues that it’s a problem of housing supply. Very little housing was built during WW2, for obvious reasons, but housing delivery did really spike in the post-war period in the UK. Local authorities also played a major role. If completions from 2000 to 2019 had averaged the same rate seen between 1950 and 1970, the country would have 2.9 million more homes today, representing a 13% increase to total dwelling count.

  This, Wolf argues, would be having an impact on house price dynamics.

  Chart: Financial Times

  2021.03.22

• Billionaire wealth in China grew by 1146% over the last decade

  

  UBS and PwC’s recent report on billionaire wealth highlights some interesting trends about the global economy and global wealth.

  • Billionaire wealth in mainland China is now second to only the United States, having grown by about 1146% from 2009 to 2020, compared to 170% in the US. As of the middle of this year, it was sitting at about USD 1.7 trillion in China, compared to USD 3.6 trillion in the US.
  • Hong Kong remains a force with only 1,105 square kilometers of land (not all of which is developable). Billionaire wealth grew by about 208% to USD 356 billion over the same time period as above. That puts it ahead of the United Kingdom, Canada, and Brazil in total dollars.
  • About half of all billionaires seem to have a significant amount of their wealth invested in real estate. Somewhere between 21-40% of their net worth.
  • At the same time, the report identifies the real estate industry as having the fewest number of “innovators & disruptors.” Only 17% of billionaires (whose wealth is primarily derived from real estate) are classified in this way. The report calls out the sector as being “especially slow to embrace technology to boost efficiency.”
  • Perhaps the most interesting takeaway is that, even within the rarified billionaire community, tech is driving polarization. For most of the last decade, the sector didn’t matter all that much. The rich were getting richer. Now it’s more so the tech rich. And COVID-19 seems to be accelerating this trend.

  This is not to say that I think people are particularly worried about billionaires who maybe aren’t getting as rich as they used to. That’s like complaining about being too good looking. But it is clear that tech is driving a bunch of macro shifts in the global economy and this is just another example of that playing out.

  Image: UBS and PwC

  2020.10.18

• Were the Victorians better city builders?

  A team of researchers at UCL recently surveyed 2,500 households across the UK to see how the design of their homes and neighborhoods has impacted their experience during lockdown (May to June 2020).

  Perhaps most notably, the report, called Home Comforts, found that people living in housing built in the last 10 years were more likely to feel uncomfortable during lockdown (1 in 5), compared to those living in homes built before 1919 (1 in 7).

  On top of this, people living in Victorian era housing were more likely to say that their neighborhoods were meeting their everyday needs, which seems to translate into convenient access to basic amenities (5 to 10 minute walk).

  So what does this tell us?

  That people want more ornament and clearly defined Zoom-friendly rooms? That the Victorians were better at city and community building? Or maybe that Londoners living in low-rise pre-1919 housing are generally well-established and have the ability to afford more conveniences? It’s likely a bunch of different things.

  There’s no denying that the way we build our homes and our neighborhoods has, for better or for worse, changed over the last 100 years. But let’s not forget that it’s easy to romanticize the past and the things we used to do. I’m sure it wasn’t puppy dogs and ice cream for all of the Victorians.

  2020.10.15

• Ecommerce during lockdown

  

  The United States and the United Kingdom recently published some official statistics on the impacts that this pandemic has had on ecommerce. The above chart is from Benedict Evans and he has some more over here. It’s worth a click through. What is clear is that lockdown forced a whole bunch of adoption and accelerated trends that were already underway. More people turned to shopping online. The UK went from 20% ecommerce penetration to over 30%. And the US went from 17% to about 22%. What is also clear is that grocery has demonstrated to be exceptionally resilient. Most physical retailers saw a decline in sales during lockdown. Grocery proved to be a notable exception. But what is unclear is how much of this adoption will actually stick. The UK is reporting monthly (as opposed to quarterly for the US) and already you can see signs of a possible reversion. My guess is that — provided we don’t see another major lockdown — there will be a meaningful reversion before the trend line resumes its march.

  2020.08.19

• 3D mapping of US precipitation

  

  Alasdair Rae is back with another set of interesting maps. This time he maps out precipitation levels across the United Kingdom and the United States using cool 3D extruded mappings. He calls them rain shadow maps. Above is showing the average annual precipitation in the contiguous US from 1981 to 2010. The higher the peaks the higher the precipitation. Not surprisingly, the highest values are in the Pacific Northwest with over 4,064 mm (160 inches) of precipitation per annum. Some of the patterns here are also really interesting. Note California’s Central Valley.

  2020.08.03

• The global effort to build more bike lanes

  I received an email this week from a senior real estate executive who was sharing the fact that, in response to COVID, he had decided to give up driving completely. He was now cycling everywhere — whether for work or for personal errands. And it was doing wonders for his health and his overall well-being.

  Indeed, this feels like some sort of golden era for urban cycling. Back in May I wrote about how Toronto City Council had just approved the largest ever one-year expansion of bike lanes. Some 40 km. When have we ever moved this quickly and without months (okay, years) of painful debate? Probably never.

  Of course, it’s not just Toronto. This is happening all over the world. Here are some of the numbers (taken from this recent Journal article):

  • Paris added 400 miles of pop-up bike lanes across the region — all of which didn’t exist before the pandemic – some of the streets being tracked have seen a doubling in usage
  • Oakland closed almost 10% of its streets to cars
  • Montreal is adding an additional 70 miles of pedestrian and cycle paths
  • Bogota is the midst of planning for 47 miles of temporary bike lanes
  • The UK has fast tracked over $315 million in capital spending for bike infrastructure — referring to this as a “once-in-a-generation” opportunity
  • New York’s bike share service (Citi Bike) saw year-over-year usage surge 67% in the first 10 days of March alone — before any shelter-in-place rules were even imposed

  There are obvious reasons for this rush to build out cycling infrastructure. We’re in the midst of a global health crisis and people are staying away from public transit in big numbers. But I think it’s also important to keep in mind that in many / most cases, there is really no other viable mobility solution. You cannot take all the people that used to ride the tube in London and plop them into cars. There isn’t enough space.

  So cities all around the world are doing the sensible thing and acting fast to make sure that it’s safer for people to move about on bikes. But as we all know, humans tend to have a bias toward the status quo. And so when this is all said and done, I suspect that many of these pop-ups will end up sticking around. And that will be a good thing for cities.

  2020.07.31