Chief Executive Officer, EMEA
Jones Lang LaSalle
Davos 2012 drew to its close over the weekend. Saturday offered me a great opportunity to attend some of the panels that were covering more general topics. One was around smart cities and I was frankly a bit disappointed at the level of discussion. A couple of our Consulting colleagues from across the world would have been a welcome inclusion to inject a more forward looking view. Probably another good example of where Jones Lang LaSalle can benefit the wider goals of the World Economic Forum by further increasing our involvement.
This year’s closing party was hosted by Brazil. The video screens showed some fascinating images of the country which will certainly prompt a lot of people to plan a visit there. Finally, on Sunday, there was a first opportunity to take advantage of Davos’ location in the middle of the Swiss Alps. The weather changed to sunny and the set-up was just right for a perfect ski day. Even so, this was still WEF town, so there were plenty of opportunities on the slopes and in the chair lifts to catch up with people you had met in workshops during the previous days. Which leads me neatly on to a quick Davos 2012 résumé…
The real challenge for Europe
Unquestionably, this year’s main topic was the Eurozone crisis and its influence on the global economy. It is fair to say that there wasn’t much evidence at Davos that the different views on how to deal with the situation have converged. There seems to be a US view, a UK view and a Continental European view, especially if politicians or economists were on the panel. Down on the floor of the Congress Centre, talking to business leaders, there was much more agreement on what needs to be done.
The indebtedness of governments and their ongoing overspending has to change, but that is not the longer-term issue for the Eurozone. Most business people were focused instead more on the productivity gaps between the member states. If a country like Italy has a productivity gap compared to Germany of roughly 30%, it will be very difficult to close. Even if Italy makes 3% progress every year and Germany does only 2%, after ten years the difference in productivity would still mean that Italy is 23% less productive than Germany. Why is that so important? Because productivity decides where jobs will be in the future. Currently politicians debate over the short-term threats to the Euro. Medium-term, they want to develop a fiscal union and create a similar tax regime, have the same labour laws and regulations. None of this will help to balance productivity within the currency union. The benchmark for this should not simply be the best country within the Eurozone, but the best country in the world. At the end of the day, Europe and the Eurozone will only be successful if we are able to get people into work. Youth unemployment rates, such as those we see in Spain and Greece, are not sustainable. I would make a very strong case for a bigger focus on the question of how Europe can create more jobs, before we spend too much time on the slightly academic question on whether capitalism has come to its limits.
The real estate opportunity
You think I’m getting off track? Well I am happy to bring my résumé back down to real estate and infrastructure. Anyone who has enjoyed the arrival at JFK airport in New York, taken the cab ride downtown and then walked the streets of Manhattan, knows that even this main window on Western capitalism, the business centre of the world, is hampered by disadvantages of an infrastructure which better suited the last century. All of us could give plenty of similar examples and the same applies to real estate. How many office buildings are offering efficient work space and have a low or even positive carbon footprint? How many products are produced in buildings which are completely outdated and create additional cost for extra handling and in-house transportation?
The biggest challenges arising from a strongly growing world population, after ensuring sufficient food and water, are getting people into work and protecting the environment. Think about the subsidies the Western world is spending for questionable goals, for example, in the areas of agriculture or coal mining. If we were to redirect half of all Western world’s subsidies into infrastructure and carbon neutral real estate projects, we would get many millions of people into work, make a significant impact in reducing the global carbon emissions. At the end of the day that would probably also help in regards of food and clean water for the poorest.
So, if some of you have asked yourself, what can Jones Lang LaSalle do in order to help to overcome the current economic crisis? We can all help to get that message out, at Davos, at any other conference or when talking to your clients. Building best-in-class infrastructure and greener buildings will bring people into work and will then raise productivity and help to protect these jobs for the future.