Global Cities Drive Development and Profits
Late in May A.T. Kearney, the global management consultancy and research firm, released its eighth Global Cities report ranking the world’s most competitive and influential urban centers for the year 2018. The index evaluates the performance of 135 cities around the world in terms of 27 metrics across five dimensions: business activity, human capital, information exchange, cultural experience and political engagement. Unsurprisingly, New York has retained its #1 position as the world’s top “Alpha City” with London trailing closely behind in the #2 spot. Other runners-up in the Top-10 include such well established metropolitan centers as Paris, Tokyo, Hong Kong and Brussels.
No spoiler alerts there: all of this is great, though not unexpected, news if you happen to work, live or — better yet! — own property in one of the highest ranking urbanized powerhouses. The largest and most developed urban agglomerations are the driving force behind the economic development of entire countries and even greater regions in the global economy. Agglomerations attract financial as well as human capital and provide innovative goods (at lease in the sense of R&D) and services on a scale unprecedented in human history. But can you own a stake in an “Alpha City” if you live in a different part of the world, with a few thousand kilometers between you and the nearest global city?
Until recently the answer would be a definite “yes” only if you were a large-scale investor willing to commit on a scale of tens of millions of dollars. But even if you had an amount significant for a private investor, say around a hundred thousand dollars, you would never expect to get a piece of the action — all the good places are reserved for the biggest players and the best you could hope for was to glimpse the real game from a backrow seat. And watch others reap the benefits of decades of astounding and sustained economic growth.
Sure, real estate investment funds (REITs) have been around for some time, but we have already discussed some of the disadvantages of these in one of our previous posts. We believe that a real estate investment platform based on blockchain technology is the only real and viable alternative to actually being an investment professional in the heart of any global city with nearly unlimited funds at your disposal. So, through tokenized real estate, you can take your pick among the best commercial properties that London, Paris, Frankfurt or Milan have to offer. Even if you’ve never been to one of these cities you can still be pretty confident that you’re making the right choice: after all, everyone’s an ‘expert’ when it comes to politics, real estate and competitive sports, right? But what if you could take the financial technology behind tokenized real estate another step further?
All of the cities mentioned in the Top-10 of the Global Cities 2018 and other similar reports are rather safe bets, after all London, Hong Kong or Singapore have demonstrated steady long term growth over the better part of the last two centuries. But a safe bet always brings more modest gains as compared to riskier ones. To quote the A.T. Kearney report, “Despite the lack of movement in the Index’s top 10, looking at the performance of cities within individual metrics makes it clear that even the most established global cities face significant competition from emerging urban hubs”. It is highly likely that despite your high school geography teacher’s best efforts you would still have a vague idea where to find the Czech Republic or Slovakia on the map. Meaning that someone else will beat you to it, and for good reason: the recent World Bank Group’s study Doing Business in the European Union 2018 found that Slovakia’s Presov and Czechia’s Prague are among the best cities in Europe for doing business. Ponta Delgada in Portugal and Varazdin in Croatia also passed the test with flying colors, meaning more great investment opportunities in two other places you’ve probably never heard of.
Identifying interesting opportunities in emerging markets, especially within the E.U., will be a key feature of the Thaler.One investment platform currently under development. We are trying to appeal to individual investors from say, China, Africa or South America, who would appreciate the opportunity to invest almost anywhere in the world in their local (or crypto) currency. Beating the crowd to new locations can somewhat increase risks but could potentially mean greater rewards for individual investors. In any case you can decide for yourself whether to play it safe with an investment in an office building a couple of blocks from Charing Cross or take a chance on a student housing development in the heart of Prague’s Staré Město. Alternately, you can just invest in the Thaler Fund to let proven real estate professionals make the decision for you — all with full transparency, third party auditing and total accountability. Forget about being a ‘global citizen’ — whatever choice you make, becoming a ‘global landlord’ while never having to leave the comfort of your home, has never been easier.