The Ground Floor

Compact Communities - Is Density Incompatible With Safety?

Reducing the carbon footprint of metropolitan areas will require making them more compact in order to reduce driving or vehicle miles traveled (VMTs). Forgive me for saying this (density being a four letter word) but this will require increasing the density of existing communities and building new ones with appropriate density. 

So what are the best ways to design compact, densely populated, walkable communities which are attractive, safe and lively? One thing clearly needed is enough housing so people live in the community; this is what creates the "24/7" communities which have been shown to be most successful over time. What are the best ways to do this while reducing crime and enhancing public safety?

Shanghai and Beijing Boom

This post was written by The Ground Floor contributor and ULI senior research director for Asia, Michael Pawlukiewicz.

I recently had the pleasure to lead a group of ULI delegates on a study tour of Shanghai and Beijing. We visited the Bund and Jin Mao Tower in Shanghai as well as the Forbidden City, Tiananmen Square and the Great Wall in Beijing. Our appreciation of cultural and historic features of these great cities was enhanced by going to see several new development sites, experiencing the energy on the streets and learning from experts what it is like to do business in China.

Both Shanghai and Beijing are going through extraordinary development booms fueled by lots of available capital and the eagerness of many global companies to get in on the business opportunities in China. Responding to delegates' questions about the business environment, David Hand an expat who works for Jones Lang LaSalle in Beijing said: "You look at China and perceive a risky, autocratic, communist government; we who work here in China see a stable, predictable government."

A Tree Grows in Tokyo

Working in one of the largest cities in the world (the largest, if you count the entire urban area; 11th or 12th if you're just talking about the 8.5 million people living within the city's boundaries), Tokyo developers are hard-pressed to incorporate large quantities of urban space into their new developments. However, the Tokyo Midtown project in the city's Roppongi District (profiled in the April issue of Urban Land) has bucked that trend, dedicating half of the ten-acre site to public open space, including parks, plazas, promenades, and streetscapes. EDAW, the global landscape architecture powerhouse that designed the project's open spaces, has now put together an interesting slideshow of the ideas that drove the design of Tokyo Midtown. Check it out -- the visuals are stunning.

More From China: Transportation Solutions

This post was written by The Ground Floor contributor and ULI Senior Resident Fellow, Robert Dunphy.

The best transportation solution is being there.

The scale of Shanghai, one of the world's largest regions, is immense, and their plans are appropriately mind boggling. World Cities Forum participants heard a briefing on the latest plan for the year 2000 by Wan Jian, deputy director of the Shanghai Bureau of Planning at a Wednesday program in Pudong. International connections are world class, with the recent development of a new deepwater port intended to serve five to six generations of tankers, a new airport designed for 70 million travelers, as well as improvements to the older one to handle 45 million people. The surface network includes national and regional motorways, urban streets, and an ambitious expansion of the existing subway from four lines to 11, stretching to almost 1,000 kilometers.

The underlying development plan, called the 1-9-6-6 plan calls for one city, about nine new cities of greater than 300,000 people each, 60 smaller towns, and 600 villages. The idea is that these new satellite cities would include specialized industry -- universities, shipping/aerospace, and so on, to offer a degree of self containment, a lesson learned from the failings of other countries' new towns, where residents needed to commute back to the central city. In this way, a resident of this subregion could work in the same sector, as well as have most of the daily retail and services available. That is one effective way to deal with what could otherwise be impending traffic meltdown.

Will it work? It's an intriguing question for a government and public used to following orders. If all goes well, perhaps there will be a degree of parity, with university professors living in their zone, and aerospace engineers in theirs. What if a professor decides to join an aerospace firm's research group, or someone's spouse needs to go elsewhere? My observations suggest that as the ratio of jobs to resident labor force approaches two, about 40% of residents stay in their same zone. Because the needs of travelers are fairly complex, it is tough to pin them down. If they succeed in Shanghai, there could be some great lessons for better organizing travel patterns in Europe and the Americas. As one of the speakers pointed out, the needs are so challenging that it is "like a bird in a cage -- when you can't change the cage you have to change the bird".

China: "No Longer Emerging"

Participants at ULI's World Cities Forum concurred that China has evolved beyond "emerging market" status in the global investment community, reports ULI Senior Resident Fellow Steve Blank. Below are some insights from Blank on a discussion at the forum today in Shanghai:

"Panelists were uniform in their agreement that China is no longer an 'emerging market;' it has arrived on the investment scene. That is not to say there is no premium for investing in China. It's just that the risk premium has become much smaller. It is more than a little surprising as to how quickly China has transformed itself from an emerging market to an established one."

Forum participants provided the following figures for benchmark returns on property investments in China, with the riskiest offering the greatest rewards:

• Core investments: 8% to 12%
• Value added investments: 12% to 18%
• Opportunistic investments: 18% to 25%+

"While on a relative value basis these returns are at a premium to those of older, more stabailized markets in the U.S. and Western Europe, the relative premium for investing in China has rapidly decreased over a very short time period," Blank notes.

A maturing market with ample opportunities, to be sure. Check back for more thoughts from the World Cities Forum this week.

This Just In...From the World Cities Forum

"A country without a past is like a man without a memory." So writes ULI Senior Resident Fellow Ed McMahon, noting the alarming rate at which historical buildings in Shanghai are being torn down and replaced with new high-rises. McMahon is one of 100-plus participants at ULI's second World Cities Forum, being held this week in Shanghai. Below, he shares some insights on development in the city and surrounding area during a tour just prior to the event:

"Shanghai really blows the mind: 20 million people, 6,000 skyscrapers (all built in the last 25 years). On the positive side, they [private- and public-sector officials involved in land development] are building new housing, roads and other infrastructure -- all on a scale that Americans can't even imagine.  Yesterday, I went on a tour to the historic city of Suzhou and afterward visited a "new city" of 600,000 people, built in about five years. Everything here is on a mammoth scale and the drive to transform China is occurring at breathtaking speed. 

China's Housing Boom

China's 20 somethings are finding it possible to purchase their own homes and, in fact, according to an article in yesterday's Wall Street Journal, "Property Owners Feel Right at Home in China" (subscription req'd), "China's rates of homeownership are as high as 80 percent in the cities, according to estimates-topping U.S. homeownership rates of about 69 percent."

Pretty astounding considering that prior to housing reform in 1985, "privately owned homes accounted for less than 17 percent of urban housing stock," according to the article. And, a proposed law expected to be passed this Friday will "clarify existing regulations governing property ownership" symbolically creating private-property rights in a country still headed by the Communist Party. Under the Communist system, the state owns all land and currently allows 70-year leses, but "the new law appears to allow leases on land to be extended forever, meaning families could potentially pass on property to their children," according to the article.

While there is speculation in the Chinese real estate market, the article states that "around 80 percent of purchasers are buying for their own use." 

China's real-estate boom provides many opportunities for real estate investment which is why Shanghai was chosen as the site of this year's World Cities Forum, April 17-19. 

Challenging the World Order

Did you think you had the current world order set? Asia will lead with its fast-growing and exciting economies; the U.S. will remain strong and steady while Europe will lag as expected from the "Old World"?

Will Hutton, chief executive, The Work Foundation and former editor of U.K. newspaper The Observer, challenged this conventional wisdom with a provocative address at the ULI conference in Paris this week.

The growth of Asia, he said, was attractive but had profound problems which will limit its potential such as the risk of political instability in India and China. Meanwhile, U.S. growth was unsustainable with the country in denial about its problems such as personal debt levels which could leave the country unable to drive the economy forward through consumer spending.

Finally, Europe, he predicted will be a safe and growing haven helped by Germany, which has been "written off as the place not to be and it may just be the place to be."

One of the underlying trends of this analysis was what Hutton termed "enlightenment infrastructure," which represented an economies' approach to factors such as entrepreneurship, competition, research and development, and education.

China, for example, remained a "party state" and capitalism would have difficulty overriding a culture which would struggle to adjust to an era of entrepreneurship and competition when one third of enterprise remained state owned.

This compared to some European models where the competitive spirit was high, commitment was good to education and research and development was ripe to grow. In Germany, the low consumer indebtedness means that there was scope for a sustained consumer boom. However, Europe still had drawbacks such as low population growth and over regulated financial systems.

The U.S. had strong enlightenment infrastructure but in some cases this was starting to undermine its success. For example, merger activity represented 10% of GDP which bought about a "fear in middle class America" as restructuring and redundancy fears hung over the population.