The megacities are doomed!

Post Apocalypse
Post Apocalypse.
At the moment, the megacities of the World (such as London, New York, Paris and Tokyo) seem to be unstoppable. They sook up more and more economic activity, and it’s getting harder and harder to have a decent career unless you live in one of them. House prices keep increasing inside them, while they might very well be falling elsewhere in their host country.

However, as a long-term investment I wouldn’t touch metropolitan property with a bargepole, because I think these great cities are going to collapse within the next few decades, and here’s why:

Young people don’t get attracted to the huge cities because life there is good – property prices are so high in them that newcomers will have to pay a fortune for a room in a shared flat with an hour-long commute.

The reason young people flock to the cities is because that’s where the jobs are (and especially because you’ll be able to find a new job within your field every three years or so, which means you won’t suddenly find yourself in a employment cul-de-sac).

As soon as somebody as somebody invents a piece of workplace collaboration software that companies are willing to use for their in-house staff, everything will change.

Suddenly you can apply for a job in London, New York or Melbourne while living in Orkney. And when you move on, your next job can be in Paris, San Francisco or Ruhrstadt while you remain in Orkney.

(This is increasingly already the case for small companies and freelancers – I’ve undertaken work for people living in Hamilton (New Zealand), Edmonton (Canada) and Birsay (Orkney) without ever going there. It’s today normally only the admin staff that have to be in the office.)

Once people’s normal place of work is their home (or a neighbourhood office if they prefer to leave home for work), companies don’t need huge offices in expensive locations. They can rent a hotel or a conference venue if they want to arrange a yearly get-together for their staff, or for having meetings with clients, and all they need is a small registered head office.

The companies will save an enormous amount of money by getting rid of their city-centre offices (more than enough to make up for a potential fall in productivity by letting people work from home), as will the staff by being able to live in much cheaper locations.

However, modern cities rely on the synergies of having a lot of people in one place. As soon as some companies and employees move out, the advantage of being in the city will decrease for the ones that remain. Why move to a city if you can get the same job without moving? Why pay for an expensive office if you can employ the same people by paying for a much cheaper piece of software instead?

Once a few people and companies start moving, prices will start falling. That will make the property investors move out, too, which will make prices fall even faster — at the moment, investing in property in central London is an easy way to make a profit if you have enough money to invest — and this will presumably continue until house prices reflect the attractiveness of living in that location – and for large parts of modern cities that’s not a lot. Of course people people will still pay good money to live in a luxurious penthouse flat overlooking the Thames or the Seine, but how attractive is it really to live in a concrete high-rise an hour away from the city centre?

So if I had a lot of money to invest, I wouldn’t touch unattractive residential areas on the outskirts of cities with a bargepole, but I’d try to snap up idyllic houses with good internet connections within a reasonable distance from a railway station and an airport.

I also think governments should be careful not to invest too much money on prestige infrastructure projects in their capitals (Crossrail and HS2 spring to mind in the UK) and instead invest in projects such as fast Internet connections in rural areas (such as what the SNP is promising in their manifesto).

Working from home, and the collapse of the metropolises



My Home Office III
Originally uploaded by TranceMist

Surprisingly, the Internet still hasn’t enabled the majority of people to work from a home office. Of course there are many freelancers who do just this, but lots of offices have many employees who are supposed to turn up every day, sit down at their computer, do their job and leave at the end of the day, in spite of the fact that they could just as easily have done their job from home.

Why is this? My impression is that most of the actual work people do can just as easily be done remotely.

One potential reason is that virtual meetings still aren’t as useful as face-to-face ones. Cameras aren’t good enough, and it isn’t easy to be looking at the same presentation or the same computer screen while talking (I’m not saying it isn’t possible, just that tools for this aren’t ubiquitous).

The other potential reason I can think of is that bosses find it hard to supervise their staff if they cannot physically sneak up on them. In theory, this could be resolved by putting a webcam in every home-worker’s office so that the boss can see what people are doing. I doubt many people would like that, but I presume some people would find it a price worth paying for avoiding the commute.

Anyway, let’s assume for now that it’s likely that a software company will one day soon release a program that makes working from home feasible and desirable, to a point where companies wouldn’t actually provide office space for most of their employees.

What would the consequences be? Many people would quickly realise that their is little point in paying astronomical rents in London, New York or one of the other global metropolises when they could do their job just as easily from a remote location where the costs of living are lower.

Soon people would start moving to cheap locations with decent weather, beautiful scenery and good food. Other things people would be looking for would include the quality of the schools, the presence of an international airport (for the rare occasions when you need to attend a face-to-face meeting or a conference), and the attractiveness of the tax system for people with foreign incomes.

Of course there would still be many good reasons for living in London or New York, but if just 20% of the current inhabitants were to leave without being replaced by a new influx, rents would collapse and whole areas would become ghost towns, and this process would make it even less attractive to live in a metropolis.

On the other hand, I imagine that areas such as the Scottish Highlands, the depopulated villages of many Mediterranean countries and the Caribbean islands would become new property hotspots.

This would be a huge difference compared to the last few decades. It seems to have become more and more attractive to live in a metropolis, probably because the disappearance of jobs for life, as well as the increase in couples where both have a career, has made it imperative to live in a place where there are plenty of job opportunities within commuting distance. However, as I’ve argued above, this might all be about to change.

Another way to build cities



A House on Stilts
Originally uploaded by Steve Dinn

Fitting cars into cities at the same time as houses and people seems to be a really hard task.

Has it ever been tried, I wonder, to create a new town or city by designing the roads and parking spaces on an empty field, and then put in pillars and build the houses and green spaces on top of these?

In this way, cities would appear to be entirely traffic-free — there would just be gardens and lawns with pretty paths filling up the space between the houses — while the roads would be very straight and efficient, and quite safe too because of the lack of pedestrians on the roads.

It’s possible that it’s more expensive than I imagine to build houses and gardens on stilts, but apart from that I cannot see any problems with my idea.

Has it ever been tried?

Glasgow is dying

The last couple of times we’ve gone into Glasgow on a Saturday, we’ve noticed how Sauchiehall Street and Buchanan Street have been half empty. We were wondering whether it had anything to do with the recession.

However, the Silverburn shopping centre was so crowded that the cars were almost blocking the motorway exit.

So it’s the combination of more and more expensive parking charges in central Glasgow and more and bigger shopping centres surrounding the city that is finally taking its toll.

It was probably not obvious during the boom years when there were enough consumers for both, but now people are having to make a choice, and they’re opting for the shopping centres.

It’s made worse by hospitals and other organisations leaving the city centre, too.

It’s really dangerous. If the trend is not reversed soon, we’ll end up with cities without centres, a bit like Los Angeles.

It’s important to make the city centre the centre of the conurbation, placing all the important institutions there, and to provide plenty of cheap parking spaces in the centre.

Of course shopping centres have a role to play, but if they start taking over as the primary shopping location, it’s time to change track.