Architecture Kenya

‘When the economy is doing well, one of the first sectors to rise is construction. It is also the first to hurt when the economy slows ….’ This statement sounds very true especially when said by ‘professionals’ and ‘experts’ in ‘real estate’; but is it? The very obvious and very major error of judgment here is that the ‘experts’ assert that construction/ real estate passively reacts to the fluctuation of the economy. Basic observation, however, shows that real estate actively drives the economy up or down!  Consider this: every economy runs on the basic factors of production namely land, labour, capital and entrepreneurship. Real estate, though a product of these four ingredients, uniquely affects their availability to be used for further production.

The direct observation is that real estate consumes land. Now, depending on your land usage, you either lower or increase its value/ productivity thus affecting how much capital you can borrow if you use it as collateral. The other two factors of labour and entrepreneurship come directly from humans. Thus, if real estate provides an inhospitable environment for humans these two factors will automatically be inhibited from contributing to economic growth. The ‘experts’ will then erroneously ‘inform’ us that the slow economy is hurting real estate while slightly deeper thought would reveal the opposite. 

 Furthermore, the strength of all economies is a direct function of how humans interact with their environment. The survival of our species in a healthy ecosystem is paramount. For the human being to be fruitful to any economy in terms of labour and entrepreneurial input, his basic needs must be met. These are food, clothing and shelter. This may come as a surprise to ‘players’ in the ‘real estate industry’ but shelter is a basic need! The question therefore arises, does real estate enhance the supply of the basic need of shelter or does it curtail it?
Now, if a government wanted to use electricity to boost its economic production, would it limit the supply of this power to its citizens or would it make it as available and as cheap as possible? What about ICT? Is it economically prudent to limit access to information and telecommunications technology or to ensure it spreads far and wide? Now what about shelter, the basic need? 

Also, supposing the government let loose the agricultural sector in our economy so that food was grown purely for profit. Farmers would then opt to uproot low profit staple foods and grow fancy foods for sale to the rich. Occasionally we would hold a ‘food expo’ to showcase the latest trends in the ‘real nutrition’ market where buyers would find the best food bargains and investors would see what crops gave maximum profit! Oh, you exclaim, but what shall the poor eat? Simple, the government will use our taxes to feed them! Never mind that the government is full of profit-hungry ‘farmers’ like you and I. 

 This sounds insane, because food is a basic need! Without it there is no human and consequently no investor, labourer or buyer. Isn’t it equally insane then that we subject another basic need, that of shelter, to the laws of supply and demand? We allow this basic need to be accessible only to those who can afford the highly inflated prices. When shelter is costly, the price of labour also rises, and foreign investors move to where labour is cheaper. Hence the economy loses all because we ‘invested’ in real estate. 
First Post! 04/15/2010
Start blogging by creating a new post. You can edit or delete me by clicking under the comments. You can also customize your sidebar by dragging in elements from the top bar.