Talking Property | Bringing Magic to Our Cities

KH:
Hello and welcome to Talking Property with CBRE. I'm Kathryn House, your podcast host, and I'm delighted to be joined today by one of the world's leading urbanists Professor Greg Clark. Based out of the UK, Greg has worked on strategic planning with around 400 cities, including London, New York, Barcelona, Hong Kong, and Auckland. He was in Sydney last week to headline the Property Council of Australia's Future Cities Summit, which tackled some major issues such as our current housing shortage, the long-term impacts of the pandemic, decarbonisation, where Australia's cities rank on the world stage, and the ongoing need for reinvention. I'm also joined by CBRE's New South Wales Director of Government and Industry, Ash Nicholson, who was one of the moderators at the summit. She's a passionate advocate for the 24-hour economy and creating cities that work around the clock. This was a really interesting conversation, so it's a little longer than our normal podcasts, but I think if you stick with us you'll agree there are some great insights. 

Greg, I was lucky enough to attend last week's summit and it provided some real food for thought, particularly when it comes to future population growth. By your estimate, some 10 billion people will live in about 10,000 cities around the world by 2100. In Australia, the government's intergenerational report predicts that 40 million people will be living here by 2061 with our population to rise by 15 million over the next 36 years. How we accommodate that growth is clearly a huge challenge and we're currently well behind the eight ball. So, can you give us a sense of which cities globally are leading and lagging in providing for this future population growth and how does Australia stack up? 

GC:
Well, firstly Kathryn, thank you very much for inviting me on the show and great to be here with Ash and last week's conference did indeed get into all of these issues. Let's frame it then, like this. Australia has to add 15 million people. That's the equivalent of Greater Sydney, Metro Melbourne, Brisbane, and Southeast Queensland and the whole of metropolitan Perth over the next 30 to 36 years. So, you've only really got four options in how you can add that kind of population in a country. You can either decide to let sprawl be unbound and allow every city to sprawl. You could build new cities in new locations as you did when you created Canberra. You could allow existing cities to densify and become very high within their city limits. Or, you could create a networked model of cities and towns where you have distributed densification with more compact cities and towns working together through shared transport systems. 

And if you look around the world, the model that's being pursued in the cities that are doing really well, let's take Singapore as an obvious one, but you'll see a same thing really in Vienna, in Austria, you see the same thing in the big Nordic cities, including Stockholm and Oslo and Helsinki. What they're really doing is some combination of number three and number four in my model. So, they're building new infrastructure to enable smaller cities and towns that are close to large cities to develop, to optimise, to become specialist locations. And that infrastructure enables a larger overall housing market, labour market, investment market, infrastructure platform. And when they do that, they usually combine that with densification in the city centre as well. So whether you look at what's been happening in Singapore with the growth, for example, of the Jurong District and one-north, the new towns, coupled with the very successful development of Marina Bay Sands, or if you look at Vienna where there's been limited densification in the centre, but they've essentially built a new city on the edge of the city at Aspern connected by high speed rail. Those are the models that seem to work in the cities that are able to then also provide affordable housing in large scale with specialist locations for new industries and a high amenity set for citizens. So, we've come to the point in our century of urbanisation where the existing models that cities have been using, and this is true for Australian cities, have become saturated. And what we have to do is break out of the existing model by adding new dimensions to the city, often by creating additional locations within the same metropolitan area. 

KH:
So, when you talk about creating new models and breaking out of models, I guess one of the issues that we have in Australia is that we are very dependent on that large family home. That's the whole Australian dream, car dependent. It's not a model that's necessarily seen in other countries around the world and our cities are quite unaffordable. So, you know, of Australia's big five cities, we're in the 25% most unaffordable cities around the world. So, what other housing models do you think we could be embracing here to really help future-proof our cities? 

GC:
Yes. Well, urban populations are elastic and they're growing very fast. Urban land is inelastic and finite. So, if you have a model that uses the car as the main form of transport and has as the main form of living the quarter acre block, the single-family home, the only way you can grow the population with that model is sprawl. And the problem with sprawl is that it produces very high commuting times, very low amenity sets, leaves people very dissatisfied, and it's bad for productivity, it's bad for health, actually, it's almost bad in every way. So, you do have to break out of that. But breaking out of that doesn't mean that you abandon the attractiveness of the well-facilitated suburb with the nice family home. What you have to do is complement it with other things. And that essentially means that what you want is to densify and improve the amenity set in your towns so that suburbs surround towns where there's good amenities, great connectivity, high capability and high capacity and reliable public transport. 

And if you are able to do that, you are able to achieve what I would call a kind of cohabitation of the old model of low density living with a garden or a paddock that many people want with other forms of density, including medium density in towns and high density in city centres with different kind of amenity offers that essentially provide people with choice. And if you look at what's happened in the Canadian cities over the last 20 years, and there are some parallels between the Canadian cities and the Australian cities, what you see is this rather unusual combination of low-density suburbs with high density cities. And if you can make that work with high-capacity public transport, that's a mix that provides people with choices. But I don't think you have the option simply to continue, the Australian model of this domination of the owner-occupied single-family home with every journey being by car. Because if you do that, you get locked into a low productivity model. And if it simply means that everybody decides, if they can, if they have a job where it's possible that they want to work from home, you also end up, with all sorts of other risks about job security into the future. So, changing the spatial model is very important in order to continue Australia's last four or five decades of success. 

KH:
Yes, and I think it is good to see we are starting to see new models emerge. Build-to-rent is starting to grow quite quickly in Australia, and that's a model that you've seen in the UK for quite some time now. So, it is good to see choice emerging, but I think we do still have a long way to go. 

GC:
Let me say one more thing, Kathryn, if I may, which is simply to say that in the cities that have the highest economic success, but the lowest housing affordability challenges, there's a huge spectrum of different types and tenures and offerings in housing, which is very important not just to give people individual choice, but because the modern urban economy requires for people to be available to work in different locations for different durations and different levels of intensity. And the idea that people are going to live in the same city for their whole life and therefore that they want to store up all of their personal equity in a single-family home is a bit of an old idea in the modern economy. So, a much broader spectrum of housing choices is actually much better for labour market and economic productivity. 

KH:
So, speaking about labour markets and working in different locations, it's probably a really good segue to switch tracks and talk about the aftermath of the pandemic. It's been a driver of worldwide city change. It's accelerated some trends, halted others, and it's also put that debate about working from home well and truly on the agenda. I guess that debate has been exacerbated to an extent in Australia by the fact that we are car reliant, even though we have had some really big investments in infrastructure, our public transport still has its flaws. Give me your thoughts on the working from home debate. Greg, I've seen you quoted in a few publications on that front. I'd love to hear what you think some of the critical considerations are as we evolve our cities. 

GC:
Well, Kathryn, I think the key thing to say first is that we don't yet know what the full effect of all of the changes that the pandemic brought will be. And of course, hybrid working, virtual working is only one of them. It's given rise to the very interesting phenomena, of course, of there being lots of digital nomads all over the world at the moment. People who live in one continent but actually work in another because they work virtually. And that's an interesting thing for cities to think about. But in the more general case of hybrid working and working from home, there are two or three things that we don't yet know. Firstly, we don't know how long it takes for the social capital that is created by people working together in a workplace to really erode. And we don't know whether we can approximate that social capital that produces the high levels of creativity, cooperation, and trust in a virtual model. 

That's the first thing. And when you look at this from an economics point of view there's a big difference between what is individually convenient or efficient for a single worker and whether she or he prefers to work in a certain way versus what we might call firm level or sector level productivity, where we know that there are huge advantages from interaction and collaboration. So, two things I think we can say then about this, that firstly, the return to the office has been much faster in Europe than it has been in North America. And this is partly explained by the fact that in Europe there's much better public transport systems on the whole than there is in North America. We notice a very, very high return to the office in the Middle East, in Southeast Asia, in China, where if you like the urbanisation process is in full flow. 

And in Latin America, the return to the office is back to a higher level than it used to be because there's a strong sense of the office as being a place for social interaction as well as for productivity. Now, North America is the outlier in the sense that the return to the office has been most slow, but North America is a place that's different to the rest of the world anyway. In North America, more people move home and move jobs more often than in any other continent. There's already a high level of take up of technology and there's, as it were, an enterprise model that really encourages people to do things their own way. What we see when we look at the data is that Australia seems to be following the North American model rather than following Europe or Latin America or the Middle East or Southeast Asia or China or any of the other regions of the world where the return to the office is faster. 

And I'm on record as saying why is Australia doing this? Is it because actually people in Australia are able to be equally productive when working from home and there won't be any loss of a firm level or sector level productivity? Or is it because Australians are fed up with the very long commutes that come from the dominant model of car use and single-family homes that we spoke about a few minutes ago? So, I have two worries. Firstly, I think that Australia's embracing of the working from home model could prove to be a bit of a historic mistake. An accidental, as it were, shift into something that will in the end will be low productivity. And secondly, I'm also concerned about whether in the long term it will increase job insecurity for Australians. And so, I would rather see that Australians feel that they have the option to be back in the office as much as they want to, especially the younger professionals who need to learn from each other and need to become part of the corporate culture and learn from their mentors. 

And what I don't want is Australians to feel forced to work from home because the commute to work is so unpalatable that they don't want to do it. So, what we've really got to do, I think is accelerate the transport reliability and experience, come to a more mature settlement about how many days a week Australians should be in the office versus which days and hours in the week they need to be doing something else. But really think about this, because productivity and job security are things we don't want to give up lightly, even if we seem to be taking an option that feels like it's personally more convenient. 

KH:
Yes, it's interesting you make that point about Latin America and that they're coming back potentially for the social aspect of it. And I think it's that whole idea of making work a place that you want to go to, or the office a place that you want to go to. So, the experiential side of offices and giving people that sense of choice. And clearly, I don't think hybrid working is going to go away. We're never going to be back to, you know, that full-time piece. But if we can create that sense of experience, I think that's so important. 

GC:
And if I may say, Kathryn, I think you're absolutely right. All I would say is that every sector is slightly different in terms of what we might call the attendance quotient. And of course, every role within every firm is slightly different in terms of who needs to be in and who needs to be out. And I think you are absolutely right that it's the experience of being at work, the experience of the office, the experience of the district around the office, and the experience of the journey to the office that we have to work on. I said at the conference last week that I thought that the net effect of the pandemic overall on cities was a shift away from cities simply trying to service corporates’ consumption and commuters, and instead cities realising that their value add in the long term lies in their ability to be great places to live. So, habitat. It relies in their ability to curate new creative and productive activity, which I would call innovation. And it also lies in the quality of experience that they offer to people. So, if the experience of traveling to the office, arriving at the office or being in the office is not an engaging and fulfilling experience, people will not want to do it. And if they've got the choice, they'll choose not to. But there may be other intended consequences to that as I've spelt out. 

KH:
Yes. Well, as we talk about experience, one of the areas that we covered off in the summit was the need to make our cities true 24-hour destinations. And so, it is not just about the corporates and the consumer needs to be considered in this whole debate. Ash, that was one of the sessions that you covered off on the summit. How do you think we're doing on that front in Australia in terms of creating these true 24-hour districts. In closing the summit, Greg, you gave a really great summation of that session as being about the four I's. 

AN:
Yes, in Australia, in particular New South Wales, it's one of the cities with really strong leadership when it comes to supporting the economy round the clock. Politically, we have a minister with arts, music, nighttime economy, and roads in his portfolio, which shows the focus on connectivity. We have a dedicated 24-hour economy commissioner with an expanding team and remit. And most importantly, we actually have a 24-hour economy plan. For a long time, I think we've had a real misconception on the narrative for 24-hour economy, that it's only about entertainment and going out at night. But it's really so much more than that. It's the key workers that keep our city optimised at night. It's the healthcare workers, the supply chain workers, and of course the cultural and place factors that really make people attracted to live, work, and play in a location. Greg, the four I's, I couldn't have put it better myself in summing up the session in terms of integrating the day and night, thinking about the 24-hour economy as an asset. Intentional in the curation, the safety, the authenticity, the mobility. Investing, not just letting the night trade or worker environment remain as an afterthought of our cities. And of course, identity of place, a way that it connects people and makes us attractive to talent, tourists, and community building. 

KH:
So, another thing that we saw on the agenda was AI. It's talked about in the media probably every day, and indeed one of the speakers likened our current digital revolution to the fourth industrial revolution. Greg, perhaps you could talk about what you're seeing worldwide in this respect, and do you think we're ready for the AI shift in Australia? 

GC:
Well, whether we're ready in Australia, I'll leave it to Ash I think to comment on, but certainly worldwide, what we're seeing is that AI is basically everywhere. It's ubiquitous. AI is changing the way we organise, manage, sequence, and maintain our cities. AI is at the heart of our anticipatory maintenance. AI is at the heart of every time we pass through a security control or a visa or passport control. AI is there when we are entering a stadium or getting on or off a piece of public transport. AI is in the operating system of every building we walk in and out of. So AI is everywhere and the large language learning models that are now being used have the ability not just to create the internet of things that we understand very well, or the internet of the city, the internet of place, but they also have the ability to begin to interpret and to make offers, to ask them to encourage us to do things that we might not have thought of already. 

GC:
So, AI is deeply there. AI is also, of course infusing the industries and the jobs that are created in cities. And there's a global competition on not just to be the headquarters of AI or an AI hub, and many cities are vying to do this, but also increasingly the use of AI as an accelerating device in other industries, medical research, convergence technologies, in particular, of course all of the creative industries that are producing new kinds of content. AI is there. So, AI is basically re-engineering the way our cities work and operate. AI is also generating new kinds of content and new kinds of jobs within our cities. And AI is beginning, as it were, to complement every aspect of our lives. And in a certain way, AI as a tool is a very good thing, but AI, as it were, as a cloud, AI as something that becomes, as it were, a second way of thinking about interpreting and suggesting our lives, also makes us vulnerable to external influence and vulnerable of course, to various kinds of external exposure. 

So much of the discussion at the conference last week was a discussion about trust, about transparency, about the transition to a more AI enabled world, and the need for people to be much more conscious of how AI operates in our lives, and to think more carefully about what we want to share, what we don't want to share, where we want to be nudged and where we don't want to be nudged. And if you like, the risk of AI creating robot cities rather than the opportunity for AI to be an enhancer and a complement of our own unique experience. So, a lot of work going on there. AI safety is going to be a very big issue in the world over the next five years. And if you like, the next generation of cybersecurity discourse is all about AI and how that works in our lives. So, watch this space, this is going to be a very big agenda over the next period of time. 

KH:
And it's the three T's. Trust, transparency, and transition. So, it was a very broad ranging agenda. And I think we can't ignore the current conversations around how we decarbonise our cities. And that was a huge area of focus last week. Property is the largest single cause of emissions. And one of the comments I noted at the summit was that the challenge of our time is how to accommodate population growth and decarbonisation at the same time. Greg, I know I asked you about readiness on AI. I'm going to ask you another readiness question. Do you think that we're ready here for this decarbonisation piece? I was interested to hear Green Building Council of Australia CEO Davina Rooney say that the huge growth she's seen in renewables has given her some hope, and she also noted that she's seen more innovation on embodied carbon in the past eight months than she has in the past 18 years. So, we're obviously making some strides, but what's our readiness piece do you think? 

GC:
Well, I think we need to look at this in two ways Kathryn. The first thing I would say is, you know, are we ready to decarbonise? Are we on a fast enough track with decarbonisation? But secondly, how ready are we in terms of resilience to the effects of climate change, which is a different agenda. So, on the decarbonisation process, we know that if we want decarbonised cities, we've got to remodel our cities. They've got to become clean in their systems, their utilities, their transport. They've got to be connected, particularly they've got to provide people with low carbon transport options as well as being well digitally connected, and they've got to be become compact, they've got to be frugal in the way we use land and other resources. So that, that frugality means that we're saving embodied carbon, we are saving construction materials and everything else. So, if you imagine Australian cities moving to being clean, connected, and compact, then I think you can imagine that the conversation we were having before about networked compactness and using public transport to reorganise our urban form, it's quite a big shift that our Australia needs to make. 

So, on the energy side, Australia is doing well in the shift because of the huge endowment of sun in particular, but also other sources of renewable energy. It's more on the urban transition where Australia has more to do on the decarbonisation side. On the resilience side, obviously there are major challenges because of global warming and whether it's heat, drought, and fires, or whether it's the risk of flooding, all of the insurance issues that come from that, or whether it's other risks that are much more connected to health. I mean, fortunately Australia doesn't have the kind of air quality issues that are happening in many other cities around the world, but these things are going to become urgent. Actually, they're already urgent issues for Australia, and you can't solve the resilience challenges simply by decarbonising because you are victims of what's happening everywhere else in the world. So, you have to use the decarbonisation process I think to accelerate your own innovations and to become more productive, more frugal, make savings, adopt new technologies, and see it as good, in terms of the economy and quality of life. And then you have to invest radically in the things that will increase the resilience of Australian cities, especially around heat and drought, I would suggest. 

KH:
Yes, huge challenges in Australia. So, Ash, did you have any other key summit takeaways, particularly as it relates to the role of government in shaping the cities of the future? 

AN:
What really stood out for me is how the sectors have converged into super clusters, and that the experience and visitor economy is one of those that's really at the forefront for our future cities. And this super cluster really includes everything from a sense of place, sport, music, entertainment, but also retail, education, healthcare, and tourism. Locally, we really seem to be stuck in this head space, private and publicly, of competing across the nation like we're stuck in the State of Origin, but for cities. Like it's a sport. And we really are starting to see other countries, cities, band together and work together as networks to really become a much more compelling offer to tourism and talent in particular. So, what I think the opportunity there is for us to partner better with government and as an industry so that we can really unite and put our cities on the forefront of being liveable, prosperous, and loveable destinations. 

KH:
Yeah, I like that idea of loveable. That was something that I hadn't really tapped into before, but it was talked about quite a few times at the conference. So it isn't just about the liveability, the prosperity, it's about how loveable are your cities. 

AN:
I love that. And you do, as a person, as an individual. You know what you love and what attracts you to a place and what makes a place sticky. And those things I think are sometimes forgotten about when we're talking about urbanisation or city shaping, but they're so richly important in terms of the people experience. 

KH:
So that idea of loveability, that might lead me to one last question. And I know it's probably like asking a parent who their favourite child is, but Greg, do you have a favourite city or perhaps you might not want to single one out, cities that you think are leading the way on different fronts? 

GC:
Well, Kathryn, it's an impossible question as you say. You know, it is a bit like who's your favourite child? But I'd like to say three things about this. The first thing to say is that I think we're in a phase now in global urban development where actually it really matters to all of us that every city succeeds. So, I talk about 10 billion people living in 10,000 cities by 2100. We can't afford really, for any of those cities to fail because every time any city fails, there are going to be big implications for the global economy, for our environment, for our air quality, for our health, for our resilience. So, we’re actually all in this together. And I think that increasingly what we need to do is to talk about how each city can help every city. And we need to, as it were, reduce the competitive instinct, because actually in the end, competition doesn't matter. 

It's helping every city to succeed. That's the first thing. The second thing to say is, of course, that there are risks with a century of cities of the type I've described. That cities become increasingly the same or similar. And I like very much what Ash was saying just a minute ago about, you know, each city needs to become loveable. I have a slightly different way of thinking about this, which is to say that actually each city has got a kind of unique DNA, a unique genetic code. The accumulation of traits, characteristics, physical features, cultural instincts, behavioural types, the vernacular of the built environment, each city's got a unique endowment. And if you like, we want each of those 10,000 cities to figure out who it is and to be the city they can be rather than to be like other cities. So, we don't want copycats, we want each of those cities to be unique. 

And if they are unique, it's going to provide a much richer experience for everyone. And if you're a visitor, then of course you're going to get a very distinctive experience in each place. So, I like to say that, you know, we shape our cities and then they shape us. There is a kind of epigenetics to the city that whether we're five and a half million people in Sydney, or six million people in Melbourne, or 10 million people in London, we are having a collective experience because we live together and work together in the same city. And that connective experience has an epigenetic effect. It begins to change the way we think. So, when we're in London, we start to think like a Londoner. When we're in Barcelona, we dream like a Catalan. When we are in Sao Paulo, we walk in the way that people in Sao Paulo walk, and that's the magic of cities, right? 

That we get to have a different experience of ourselves because we're actually having an experience of a place that's different from places that we are used to. So, with all of that in mind, I would say to you, I don't have a single favourite city. Obviously I love very much the city I'm from, which is London. I love the wonderful liveability of Vienna. I love the excitement on the streets of Sao Paulo. I love the chaos of Mumbai. I like the night music scene in Shanghai. But I want to really say something about Australian cities, which is to say that in each Australian city there is this unique cultural endowment of 50, 60, 70,000 years of First Nations. And it seems to me that the thing that is critical, not just for the way Australian cities look and feel in the future, but also the way Australian cities think and act and are intentional, is really the grasping of this very unique history that no other group of cities in the world share. 

And the more Australian cities can be oriented towards the cultural, intellectual, and the philosophical endowment of First Nations, the more they will be distinctive and different. And the more, the wonderful sort of loveability to use that phrase, that Australian cities have acquired in the last 50 years of having this great sense of freedom and fun and outdoors and climate, the more that's combined with something that is wiser and deeper, and in particular this very long multi-thousand year heritage, the more Australian cities are just going be the best places in the world, and the more people will want to come and live here, and the more proud Australians will feel of being here in the first place. 

KH:
I love that. And I love the whole idea of the magic of cities. So, Ash, a hard act to follow. But do you have a favourite? 

AN:
I'm going local. I really have to say Sydney. I absolutely love this city. It's why I live here. Greg, you mentioned a focus on place capital, how we value it, and the need to define ways to embrace, shape and integrate it in everything we do. When I think about Sydney, I think it has such a compelling, magical offer that's just so beautifully unique to Sydney. We've got the beaches, the iconic landmarks, the beautiful community suburbs with huge amounts of open space, but we also have that busy city density as well. We're the financial capital of Australia full of opportunity, ripe for innovation, and we attract the best talent. We also have a thriving nighttime economy that's blossoming away from being dominated by alcohol and thriving in the celebration of the global cultures that choose to live in our city. And we have really passionate people working as a community to continue to strengthen that vibrancy and safety and opportunity of the night. 

KH:
Well, I think there's a lot to digest here today, and it was so great to have you on the podcast, Greg and Ash and I really did enjoy the conference. I think there were just so many takeaways from that. Also, thank you to everyone who's tuned into this latest episode of Talking Property with CBRE. If you like the show and want to check out more, visit cbre.com.au/talking-property and you can subscribe through Spotify, Apple Podcast, or your favourite podcast hosting platform. And make sure not to miss our next episode, The House View, where CBRE's Pacific CEO Phil Rowland and Head of Research Sameer Chopra, will give their quarterly take on the market outlook and make some bold predictions for the months ahead. I'd also love to hear from you with any questions, feedback, or ideas for future podcasts. You can email me via [email protected]. Until next time.