Pathways to Property:

Starting Your Career in Real Estate

Academic perspectives
on globalisation
Video transcript

Hello. I'm Kathy Pain. I'm the Professor of Real Estate Development in Real Estate and
Planning in the Henley Business School. For anyone thinking of being involved in the
real estate industry, globalisation is incredibly important. It's changed the whole game for
those who are active in the industry. There are two big megatrends, global megatrends
that I'd highlight.
The first one is to do with economic change, and that's to do with ICT-enabled economic
change, which is around the fact that we've changed from an industrial revolution to a
knowledge revolution. And in that knowledge revolution, real estate is a big player, a big
contributor to the knowledge that we now need in a very global and integrated economy.
So, alongside this knowledge revolution, what we've seen is a change from jobs in
manufacturing production to jobs in the service economy. And, obviously, real estate is
one of those service economy providers.
As the economy has changed globally, rural population has diminished employment. And
so there's been a big surge of rural to urban migration, and that means that cities around
the world are getting bigger. Rural communities are shrinking. And the knowledge-based
workers in cities are increasing. Due to globalisation, real estate has become more
international, but it's also become more financial. So we call that internationalisation of
real estate and financialization of real estate.
Firms that might be clustered and very highly represented in a global city like London will
also have other offices around the world in other important global cities. So, the cities are
networked through the services that they provide. And at the same time, real estate is
interconnecting those cities through flows of finance associated with real estate. So
through the flows of information and knowledge that real estate helps to deliver, we also
see flows of finance capital that are being enacted and allowed through the role of real
estate service providers and their interconnections with financial services.
In fact, it's not unusual now for people working in the real estate industry to require some
kind of financial training in order to be able to do their job effectively. So it's a very global

©University of Reading 2020 Tuesday 25 February 2020 Page 1

Pathways to Property:
Starting Your Career in Real Estate

world. Real estate is not only much-affected by it, but it's actually a key part of
globalisation.
There was somebody called John Freedman, who was a planner, who in 1986 did some
research on what he called the world economy and the positions of different cities in the
world within that economy. And his map is terribly outdated now. So Shanghai and
Beijing actually, even in 2000, were only listed amongst the top 30 cities in the world in
terms of their importance in terms of business and financial services. So those are the
important value-adding bits of the new economy.
Whereas today, they're ranked 5 and 6 for those services. And when you consider the
fact that Hong Kong is now also a global city located within China as a nation-state, we
see three top world cities of great interest for the real estate industry all in one country.
It's the only country in the world that's got more than one important world global city. In
the next 20 years, every year China will require between 1.6 and 1.9 billion extra square
metres of residential and commercial space. So that's every year for 20 years. It's an
astonishing statistic.
So we have now a very complex environment that's about the internationalisation of real
estate and also the financialization of real estate. So thinking internationally, thinking
financially are very important dimensions of real estate in terms of how you come about
studying it, the research that's being done in this area, and also the ways that you will
need to think about real estate when you go out into the industry.

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