Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 343

In may ways, this recent article by Brian Potter about how fast cities can grow, feels intuitive: Small cities tend to grow faster than big cities (on a percentage basis) and, as cities get bigger, their growth rates tend to decline. It is, however, still interesting to see the data behind this intuition:

A city of less than 100,000 might be able to have growth rates of 10-20% or more, and cities of up to 3-400,000 can potentially have growth rates in the neighborhood of 10-15%. Potential growth rates tend to fall as cities grow larger, and cities above 1 million people almost all grow at less than 10% per year, and usually less than 5% per year. The US, the Middle East, Southeast Asia, Africa, and South America all seem to have followed this basic pattern, assuming the data is reliable.

It is also a good reminder just how much of an outlier China is:

Unsurprisingly, since 1950, Chinese cities have mostly exhibited higher growth rates than US cities. Only around 12% of US data points are above a 5% growth rate, whereas for China this is close to 50%. China also has 2.5x the fraction of cities growing above 10% per year, and 3.3x the fraction of cities growing above 15% per year.

And some cities are outliers even within China. The most notable here is  Shenzhen , which saw enormous growth after it became China’s first special economic zone in 1980. At a population of around 200,000, Shenzhen was growing at 35% annually, and it was still growing at over 20% annually when its population crossed 2 million.

Just imagine these numbers compounded. Even small variances can result in significantly different outcomes over time:

New York’s growth rate, however, declined less than Los Angeles or Chicago as the city grew larger. At around 3.5 million people, New York was still growing at over 3% per year, compared to less than 1% for LA and Chicago. This may not sound like much, but it's the difference between doubling in size every 23 years vs. every 70 years.

Now here's what I'm wondering after reading the article: Should we be thinking of city size as the single most important factor in determining urban growth? Because my mind immediately went to population densities, zoning controls, and other factors that might constrain or encourage growth.

But the data seems to suggest that, for many cities, this doesn't seem to matter over the long run. It is as simple as saying, "this city has X number of people and so it's more than likely growing at somewhere around Y% per year."

That said, what's up with China? What is it that allows a city of 2 million people to still grow at over 20%? Is it the sheer influx of people migrating from rural to urban areas? Or is it that you need a one-party authoritarian state to really clear the way for growth?

As cities get bigger there does appear to be a natural tendency toward slower growth. Part of this is the low base effect . But the declines are not always consistent and there are meaningful outliers. I am now curious to know what, for the most part, causes these differences.

One generally accepted investing adage is that you "make money on the buy". Meaning, what you pay for an asset will largely determine your fate. Price matters a lot. Some/many would even argue that it's the single most important thing when it comes to investing.

Said differently, if you had to choose between paying above market for a high-quality real estate asset or paying below market for a low-quality real estate asset, you would choose the latter, because you have a higher probability of doing well.

In some ways, I agree with this. If you're buying an asset below what it's actually worth, then in theory you could turn around and sell it tomorrow for the market price. So you are quite literally "making money on the buy."

On the other hand, if you've paid above market for even a high-quality asset, you've now just lost money (at least in the immediate term). Because if you also turned around and sold it tomorrow, you'd lose money.

But is this always the right way to think about investing? One of Warren Buffett's many famous lines is that he'd rather buy a wonderful company at a fair price, than a fair company at a wonderful price.

And this would suggest that "cheap" isn't the only metric to consider. Especially if you think like Buffett does and you want to hold assets forever and benefit from the compound growth that comes along with wonderful assets.

So as obvious as it may seem, a better way to think about "making money on the buy" might be that you need to consider both price and the quality of the asset. Cheap could be a feature, or it could not be. But cheap and wonderful are generally always a good thing.

Swiss architecture firm Herzog & de Meuron has just completed what is being called the world's largest floating infinity pool.

Located in Lake Como at The Mandarin Oriental, the pool -- which is built out of dark Cardoso stone in order to blend in seamlessly with the lake -- was fabricated off-site in Finland and then assembled in Italy.

In order to reduce the impact of waves, the pool has also been carefully secured to the bottom of the lake.

I tried to find a cool video that I could share here, but nothing came up. So instead, you're going to have to check out the photos that HdM has on their website and that Wallpaper shared over here .

As far as floating infinity pools go, I can confidently say that this is the most beautiful one that I have ever seen.