Discussion:Accueil

Dear Elena,Having seen the book go from draft to final publication, I am lleary excited about what could come out of this blog.  There are a number of themes that could be of interest.  For example, managing risks that come from these different types of markets (real and unreal) including the types of tools needed to manage risks depending on what proportion of the market in a given city or neighbourhood falls in the  real  or  unreal  category.  What is the benefit structure from the potentially significant payoffs that come from broadeing access to titles and registration and to institutions in general?  Several players would benefit from and could contribute to such a topic.  Are you going to be sponsoring specific conversations on such issues? It would be great to see how and where the principles of the book are now being applied.Best regardsFrannie      Dear Frannie,Thank you very much for your contribution and the focus you bring to the discussion.  Indeed you have seen the production of this book from the earliest stages. More importantly you have witnessed the development of the ideas presented in the book since the beginning of the nineties. Some of the themes you suggest are very much in order as they go hand in hand with the sustainable transformation of “Unreal” to Real. I welcome and will sponsor specific conversations. Why not start with a topic you brought up that of risk management.The debate on how to manage risk in markets festered with “Unreal” estate is a major one and rather current. I touch on this in chapter 3 and 5.  Risk is measured with different tools when a country has a robust formal market and thus the majority of its property market is recorded on a secure property rights system. In such case property values are less distorted (because relative prices are less distorted). The risk evaluation tools used are mainly based on a straightforward cash flow analysis of the asset in question or usual credit ratings. These tools however are not effectively applicable in a market that is more than 50% festered with “Unreal” property. They can be misleading and even dangerous. What should be used in such cases are methods accepted by the community and almost all based on reputation. The financial and economic fragility of a market is very much related to the percentage share of “Unreal” estate. Thus the effort to transform it is crucial. It is not simple titling or registration but that of establishing a robust system that emits and enforces property rights.  The key to this is to agree on the definition and the implementation method of this “system”.  It is this type of challenge that urged me in writing Prosperity Unbound.The players that should be involved in the transformation should be visionary investors, government decision makers (and policy makers), and the owners/citizens. I have come across some visionary private sector leaders as well as government leaders  the challenge is to bring all players together. I would extend an invitation to all three players to present their views.