We’ve got to… accentuate the positive

The only thing we have to fear is fear itself. As many of you might already know, these were the words uttered by Franklin D. Roosevelt in his inaugural presidential address in 1933. He was speaking a few years after the Wall Street Crash and deep into the Great Depression that followed

This was also a time when democracy was under threat from aggressive totalitarianism abroad, as well as at home from the allies and admirers of these dictators – the reactionary demagogues and media barons stoking the flames of division in order to further their own ambitions. Any of this feel familiar?

The parallels between the world we live in now and that of the 1930s become starker the more you think about them. Right now this is what we have to contend with: a war of conquest unleashed by a Russian dictator, the cutting off of the supply of gas and oil to Europe by that regime, an influx of refugees fleeing this conflict, the economic distress caused by runaway inflation and the interest rate hikes aimed at getting it under control, the looming prospect of a recession (when we’ve only just recovered from the last one), the rise of populist autocrats, and the environmental disasters that are becoming all too commonplace as we fail to take the action needed to curb global warming. Oh, and I forgot that the pandemic still isn’t over – and there could well be others waiting for us in the years ahead. For the real estate market, we could also add the disruption to supply chains (pandemic- and war-related), soaring construction costs and unhelpful government legislation. And yet, the local property scene remains buoyant, even more so than the rest of the economy and society. So what’s going on?

Could it be, as the real estate market matures, that it has attained a certain measure of wisdom and a philosophical outlook on situations like the one that now faces us? (Sadly, I graduated in philosophy a long time ago and my memory of all the schools of thought is a bit hazy, so please forgive me if I now go on to misrepresent them.) In that case, is it philosophical hedonism that real estate players have embraced – the idea that pleasure is the only good? Well, this might have been the case before the credit crunch, when they all seemed to be competing to throw the most lavish party possible to mark every warehouse, office building or shopping centre opening. Such extravagancies, however, simply cannot be seen on the market today.

Perhaps the market has adopted a situationist approach – that it’s only out of chaos that true creativity emerges? Certainly, this seems true of how warehouse developers seized the day in the wake of the pandemic, when many consumers were forced to go online to do their shopping, while at the same time distribution channels from the Far East were disrupted. They responded by going all-out with last-mile warehousing and also benefited from distribution centres being moved closer to their end-markets. Flex offices have also surged due to Covid, since when home-working has become the norm – and they were given a further boost by the number of companies relocating from Ukraine to countries in the CEE region. PRS is another sector that is booming due to the economic, geopolitical and pandemic-related chaos, as people have been forced to rethink how they live and what they can afford, while the refugees flooding in have also needed somewhere to live. But again, this is obviously not situationism – no company with a carefully drawn-up business plan wants the situation to be chaotic and the future so uncertain. What these developers have actually done is to respond adeptly to changing events.

Then does cynicism fit the bill – the disregard of conventional norms? Again, this doesn’t seem like quite the best way to characterise them, given that they pretty much all insist on such market norms as ESG.

The classical school of thought that actually fits their present attitude best is stoicism. As with hedonism and cynicism, this term in philosophy doesn’t have the same everyday sense as it does today – it doesn’t mean suffering through whatever life throws at you with a resigned shrug. Stoicism holds that being paralysed by fears of factors we have no influence over is to lapse into irrational fear. The stoic instead embraces the positives. In fact, this is the only rational way to be – and it brings us back to the words of FDR. We can see from his example that taking this attitude is how we’ve overcome much worse crises in the past – and it’s the only way we’re going to get through all the scary stuff coming at us right now. The only difference is that today it’s the real estate market that’s showing us the way to do this.