by Andy Watson, Partner, Europa Capital
It is now nearly three months since formal lockdowns began across Europe and somehow those words just do not feel right. In some ways, it feels like three years, in other ways only three days. French philosopher Albert Camus said that “if time seems to pass so quickly, this is because there are no landmarks” Being locked down in a single place for months has distorted our perceptions of time and taken away our landmarks. During the 80 days in which much of the world has been locked down, routine time sequences have been disrupted by strong other-worldly forces.
Netflix was my friend during confinement. As an addict of time travel stories and with actual travel strictly prohibited by the French police force, I watched pictures of the past and moved in time – but not in place. The bizarre sunny lockdown period felt just like some of the screen science fiction – only with emptier streets. For the first time, most of us experienced how it feels to live with only the present moment, with few plans for the immediate future beyond wine, walks and webinars.
In the near future (now seemingly called the “new normal”) it is widely acknowledged that the coronavirus will be an agent for change, accelerating trends in behaviour already identified in the recent past. Watching the BBC’s Life on Mars (a time travel fantasy set in 1973), started me curating a time travel analogy whereby the coronavirus disruption is actually a portal to a time machine moving us backwards and forwards.
Before stepping into the time machine, let’s remember the immediate past. For a decade, a period of relative peace and a benign world economy had moved most of us forwards in a familiar, linear and chronological way. One year at a time; New Year – Easter – summer holidays – Xmas. Repeat. The rising importance of populism, technology and sustainability has been rocking our journey – but mostly at a comfortable velocity.
For some observers, the coronavirus time machine threatens to send Europe back to 1975 – a time before the golden age of cross-border trade. The gap between the haves and have-nots looks set to be further widened by the health crisis, fuelling more populist momentum. In some dark scenarios, a fragmented 1970’s Europe may be returning – along with the Deutschmark, Franc, Lira and Guilder. The nationalised industries, big government and high taxes of the 1970’s also look set to make a comeback. How else to save our planes, trains and automobiles?
But the coronavirus time machine moves in both directions. We are also shooting forward from 2020 to 2025 and doing that with many positive outcomes. Innovation and technology are being swiftly embraced by friends and family chatting on Teams and Zoom. The health crisis has not only accelerated tech adoption but done so across generations – so it is no longer just digital natives who are welcoming innovation. For the first time, many octogenarians are using new laptops to see their grandchildren – located around the world – as well as feeling comfortable ordering online. Without this pandemic, these lasting changes could not have happened so swiftly.
In January 2020, climate change and wellbeing were the key topics of the Davos Economic Forum agenda, also for hard-bitten financial businesses. Awareness of the urgency of these topics is more acute now. Even the hollow introduction to emails “I hope you are well? (in these difficult/challenging/unusual times)” suddenly began to sound a little more authentic in lockdown. The time machine is certainly accelerating the journey to a place of wellbeing. Maybe, just maybe, as the “Great Revelation” YouTube clip suggests, a kinder future awaits.
My imaginary time machine construct would have a particular set of challenges for the slow-moving property industry. In the dark journey to the high tax 1975, governments needing levies to nationalise industries would not risk many votes by going after commercial property occupiers and investors. If we do retreat to the fragmented one-nation thinking of that decade, the real estate clock could also be wound back – since it is cross-border business which best brings the property industry transparency, maturity and diversity of thought.
In the lighter journey to a 2025 of technological innovation and wellbeing, a big challenge for the property industry would be for our planners to balance short term expedience with long term sustainability. Pre-lockdown, technology was already blowing sectors in opposite directions – with tailwinds behind logistics properties and headwinds into the face of retail assets. Unchecked, those tech-driven movements would come at an environmental and social price. Covering fields with warehouses brings articulated trucks close to suburbs whilst shuttering high street shops and restaurants makes sad town centres.
For some time, the rock of property investment strategies has been the unstoppable force of urbanisation. The Great Lockdown has finally challenged that orthodox thinking. Right now, the single biggest open property question is, of course, the ‘future of the office’ and especially since daily commuting to work in dense cities has suddenly become much less attractive. The 2025 wellbeing challenge is to create safe and attractive places to both live and work (with many people increasingly likely to do both in the same space). Beyond work, a further wellbeing challenge for the property industry is adapting to ageing demographics. With population pyramids starting to bulge at the top, the public sector will need the private sector to make and operate quality care homes.
Until a reliable coronavirus vaccine exists, it seems we are set for economic volatility and a turbulent period of imaginary time travel. Abraham Lincoln was unusually interested in time and said, “the best thing about the future is that it only comes one day at a time”. If Lincoln’s measured pace feels a little slow and 19th century right now, the 16th US President is also attributed with setting a time travel challenge relevant to our post lockdown new normal; “the best way to predict the future is to create it”.