Long-termism for the ‘now’ generation

Mark Preston, Grosvenor Group CEO, looks at long-termism in the digital age, as we announce our annual results.

28th April 2015

We live in an era of instant gratification and information sharing: we want it all and we want it now!  Gone are the days of the carefully-planned shopping list: thanks to a service called Amazon Dash, consumers can order household supplies with the help of a handheld Wi-Fi ‘wand’, allowing you to scan or say what you're running low on without having to leave your kitchen.

We have come to expect the same when communicating with one another: the social media landscape encourages nothing less.  Take Periscope, an app which allows users to broadcast live video to their followers.  Or Snapchat, where images and videos sent between users are visible for mere seconds before disappearing forever – instant, fleeting, temporary and hurried.  Likewise in the business world: the instantaneous nature of electronic trading means that companies are beholden to the minute-by-minute demands of the market, which can make it harder to focus on longer-term strategies.

Digital advancement is positive in many ways, but we should be careful that it does not displace the long-term view.  Making decisions with the long-term in mind is now less likely to be the ‘default’ setting for individuals or business, perhaps most obviously in the context of the horizon for corporate financial returns.  But surely it is the long-term that is the natural human timeframe?  We are inclined to think generationally, for example when it comes to considering the legacy which we would like to leave behind for our children and grandchildren.  And I think most of us enter marriage with a view to it lasting our lifetimes.  Similarly, although rotating crops or allowing a field to lie fallow may seem like an inefficient use of a farmer’s resources in the short term, this patient strategy avoids exhausting the nutritional content of the soil and helps ensure better yields in the future.

Property as an asset class inherently lends itself to long-term investment thinking.  If not permanent, it is far from temporary - leaving its mark for many years on its community.  It is illiquid as an investment; the development process is long, complicated and risky; and it is capital intensive.  Care, thought and consideration are required before commitments are made.  Ownership of property ought logically to mirror its long-term characteristics, but too often it does not, with a resulting mismatch between objectives and outcomes.  Investors tend to work to unrealistic investment horizons, implementing inappropriate financing, taking excessive specific risks and making letting decisions that are value-destructive long term, even if they are income-enhancing in the short term. 

Grosvenor has made a long-term approach our ‘natural’ state as a group, which gives us an advantage when considering different investment and development opportunities.  Investing in public realm projects on the London estate is just one example, patient land assembly at Ambleside in Vancouver is another.  Although the short-term financial benefits of such projects are not immediately evident and are certainly hard to quantify, the longer term financial and other benefits are more obvious and help make the immediate environment more attractive, vibrant and of lasting quality.

Such an approach does not rely on a particular form of ownership, but rather on a suitable philosophy and on the case for the long-term being made.  Grosvenor’s ‘Living cities’ philosophy is inherently long-term and focuses on creating high quality places for people to enjoy, which use resources responsibly; we do our utmost to champion this.

We may all live in – and benefit from - an age of instantaneous ‘likes’, ‘comments’ and ‘shares’, but having the confidence to take a longer view can bring far greater and longer-lasting rewards.  It is our natural state, after all.

Mark Preston,

Group Chief Executive
Grosvenor
 

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