Disruption in Davos

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Well, three days in it’s fair to say that Davos 2018 has been all about disruption!  At the beginning of the week it was the record breaking snowfall, followed by the inevitable disruption caused when 70 heads of state descend on a small mountain village, but the winner is without a doubt “technology”.  There is not a meeting or a session at the conference where the spectre of technological disruption to business, political systems and society isn’t central to the discussions.  

 Most delegates are grappling with how best to leverage their organisations in the digital world.  In my first post, I mentioned Blockchain.  As Christian also said in his blog on Thursday, it’s very clear that the application of the Blockchain technology is rapidly evolving from its crypto currency beginnings. Real estate was a specific focus of one session as another city, Dubai, will soon go live with its land registry held in Blockchain.  However, it is the more altruistic ambitions of some delegates to see Blockchain as a solution to democratising real estate which really grabbed my attention.  Whilst regulations in some markets will take some time to overcome; the thesis is that Blockchain will enable private investors to acquire tokens (units of equity) in individual properties or infrastructure in an immutable register of ownership, which could range from residential tenants having a number of tokens in the building they rent, or acquiring a slice of a famous landmark office building in Manhattan, to give a couple of examples. One quote I heard was that “Blockchain would unleash the single biggest increase in the liquidity of fixed assets that the world has ever seen”.  

 With a generally positive sentiment around global economic growth prospects, investor sentiment towards property here has also been broadly positive – with geopolitical risk being the most frequently cited caveat. As John Forrest also referenced, with most companies feeling positive about the opportunity to grow, there is a clear focus on the workplace being an important part in providing the environment for their teams to thrive and in driving productivity.  Real estate investors here want to know more about this too and are increasingly attuned to this and a frequent topic of discussion.  As for investment intentions – despite this now extended real estate cycle, most of the private family offices and institutional investors here would like to increase their exposure to real estate.