Brandon Donnelly — Daily insights for city builders. Published since 2013 by Toronto-based real estate developer Brandon Donnelly. — Page 840

Few are able to do "small houses" quite like the Japanese. Below is the Flat House in Tokyo by Yoshinori Sakano Architects . Completed in 2011, it was designed for a young couple in their twenties who wanted to build a home that was like a " small art museum ." Looking at these photos, I bet many of you will be surprised to know that the site area is only 100.10m2. The building footprint is only 49.00m2. And the total floor area is 79.36m2. This is the kind and scale of housing that is now permissible on many of Toronto's laneways. And here, in Tokyo, you can see that it is serving as a family home. (The working kitchen is quite a contrast with the rest of the house.)

Photos: Takumi Ota

On Monday, Indonesia’s president, Joko Widodo, announced a plan to build a new capital city on the island of Borneo. The plan is in response to Jakarta's formidable environmental challenges. It suffers from some of the worst air quality in the world and is struggling with a severe subsidence problem, which, I understand, is partially (or largely) a result of climate change and the unregulated extraction of groundwater.

About 40% of the city now sits below sea level and the worst affected areas are supposedly sinking at up to 20cm per year . This gives Jakarta the dubious distinction of being the fastest sinking big city. On top of this, it is also one of the biggest cities in the world in terms of population. The Jakarta megalopolis has over 30 million people, placing it 2nd after Tokyo according to this list .

Here's a short video from the BBC that will give you some visuals to go along with the above. These are the sorts of urban challenges that will make you forget all about separated bike lanes and 45 degree angular planes . And they are not entirely unique to Jakarta. If you can't see the video below, click here .

https://www.youtube.com/watch?v=qOSwBIstZUs

For two reasons, I really like Fred Wilson's recent blog post on hypothetical value to real value . Firstly, it is structured in the way that I think good blog posts are structured. He starts with a personal story (about this son) and then uses that to take a position and impart some knowledge about the venture capital industry. It makes for a more engaging read. Secondly, I like how he describes the journey and spread between hypothetical value and real value:

Venture capitalists and seed funds and angel investors make or lose money on the journey from hypothetical value to real value. And when the spread between the two narrows, the money we make is less. When the spread increases, the money we make is more. It is easier to drink your own Kool Aid in the world of hypothetical values. You handicap the odds of winning more aggressively. You trade ownership for capital at work. You accept the new normal. Real value doesn’t move so fast. Because it is right in front of you. You can see it. So it is not prone to flights of fancy. I try to keep this framework front and center in my brain as we meet with founders and work to find transactions that work for everyone. I find it to be a stabilizing force in an unstable market.

All of this is related to the notion that you make real money when you're right about something that most people think is wrong. Because that would be hypothetical value. If it were real value, then everyone would simply believe it. It would be "right in front of you." And this is pretty much true of all competitive marketplaces, including the real estate industry. Risk and uncertainty create opportunity.

Photo by  James Sullivan  on  Unsplash