Avalanches in slow motion

Beware megatrend investment perils, warns Nicholas Brinckmann, the speaker for the board at Hansainvest Real Assets.

Futurologist Matthias Horx famously characterised megatrends as “avalanches in slow motion”. Megatrends represent deep-rooted social, political, technological and economic changes that unfold gradually (and later rapidly). In real estate, these trends — both separately and in combination — embed large-scale behavioural changes, which influence long-term demand across sectors.

For proponents, megatrends represent clear forward indicators of future real estate sector demand drivers. However, investors that chase megatrends without stress-testing assumptions, rigorous due diligence and asset business plans, risk failure. Examining some of the pitfalls of binary megatrend thinking — not to negate the validity of many of the underlying trends — can demonstrate the fluidity of often assumed one-way demand drivers.

Most megatrends are underpi