Building The Creative Economy
Creative industries have stood the test of time and are rejuvenating even in the brick and mortar business of real estate
Issue: Jun 2011
The vertical wall outside Musée du Quai Branly in Paris is a signature piece of horticultural artist Patrick Blanc
Photo credit: Patrick Blanc
The economies of today have come a long way since the turn of the 20th century, from the focus on mass production, economies of scale and cost savings to generate output and profits, to today’s emphasis on knowledge, innovation and creativity to boost the bottom line. In other words, the synthesis and application of ideas in this age has become one of the most important factors that drives economic growth today.
Central to the theme of a “creative economy” is the importance of generating ideas. New inventions and innovations are born from these new ideas, which are then turned into marketable products and services that have positive economic value. Creativity, therefore, has a tangible economic impact.
Growing Importance of Creative Industries
In the 2010 United Nations Conference on Trade and Development report on the Creative Economy, creative industries are identified as “the most dynamic sectors of the world economy”. Whilst these sectors are important growth contributors to the developed economies, they offer new and high-growth opportunities for developing countries.
Broadly speaking, these industries are the ones that produce goods and services using creativity and knowledge as primary inputs instead of the traditional model of being capital- or labour-intensive operations.
It has been pointed out that the performance of these industries vis-à-vis other traditional economic sectors is more resilient even during the global financial crisis in 2008 and 2009, when international trade shrank drastically. This outcome highlights the importance of developing a creative economy as an engine of growth and a buffer against negative shocks, as the global economic landscape and competition continues to evolve.
Creative Economy Rejuvenates the Real Estate Industry
With the growing importance of creative industries, one may wonder if the traditional industries of an economy will lose their luster and see their economic significance diminish over time. On the contrary, the development of a creative economy could entail significant spillover benefits by spreading fresh ideas and innovation, thereby helping to rejuvenate the rest of the economy. The real estate industry is one example of such beneficiaries.
Due to modern society’s heightened awareness and desire for environmentally sustainable practices, the push towards construction of “green” buildings or retrofitting existing buildings to make them “greener” has gathered momentum in recent years. Such efforts refer to the use of environmentally sustainable technology and innovations in the design, construction and occupation of buildings.
As an extension of the notion of a creative economy, such green initiatives undertaken by real estate developers can be seen as employing the output of creative industries by harnessing their new ideas, innovations and technologies to reduce the carbon footprint of buildings.
This growing social consciousness is forcing developers to strengthen their green credentials in order to compete better in today’s marketplace. The collective output of the creative economy, be it in the form of new construction techniques, sustainable construction materials and renewable energy, radical design concepts or cutting-edge technologies, will serve the interests of the real estate industry very well indeed.
Embracing the Challenge
The rising tide of turning buildings “green” is a good example of how creative industries are making their presence felt in the real estate sector. In the same way the rest of the economy is increasingly being influenced by the creative industries today. From the use of new design and architectural concepts to the adoption of cutting-edge technologies to reduce the carbon footprint of buildings, their output is becoming more important and high-profile.
The challenge for real estate developers is to harness the best of existing technologies and concepts while ensuring that new innovations can be seamlessly integrated when they become available. Given the current developments, the real estate industry has already made significant progress and looks set to benefit even more from the continued rise of the creative economy.
Article contributed by Terence Yap, Executive of Economics Unit, CapitaLand Limited