Contemporary cities manifest themselves as complex adaptive systems and with the increase of the global population smart city planning is becoming very important. Cities are evolving in complex and multidimensional ways that can no longer be limited to land use and transport development.

Cities, like markets and economies, are complex systems that co-evolve. They are dissipative, meaning they are irreversible and have a history, and show self-organization, emergence, and explore their space of possibilities. The process of self-organization is facilitated by dense interactions.

This is one reason why technological innovation specifically information technology is driving the emergence of self-organization. Novel technologies form from existing technologies, so the collective of technology is self-producing or as Maturana and Varel called it ‘autopoietic’, meaning the process is a self-creating one.

Real estate besides being ‘complex’ is multidisciplinary. James A. Graaskamp the most important figure in real estate research has fiercely fought for a multidisciplinary approach in contrast to a financial management approach. ‘Jim’ was a professor and department chairman of real estate at the University of Wisconsin-Madison, who has helped to establish real estate within the realm of academia. He is credited with creating a multi-faceted ethics-based curriculum now widely used in teaching real estate. Every researcher makes a reference to his waste oeuvre. He is one of the few researchers, who has also written about the fundamentals of real estate development.

Even though complex science is not an integral theory, it goes into every important subject connected with real estate: urbanism, economics, management, cooperation, architecture, art, and last but not least education. It is important to emphasize that complexity theory should not be seen as aiming at a new synthetic theory of complexity of any kind. It is more of a cross-disciplinary field of research and meeting place for dialogue between specialized groups of people and across a variety of scholarly disciplines including biology, chemistry, medicine, computer science, physics, fractal geometry, and economics.

There is a basic delineation adopted by Glouberman and Zimmerman important for real estate: the distinction of simple, complicated, and complex. In short the baker baking bread, every morning is perceived as a ‘simple’ replicable process. Flying to the moon or building a jumbo jet is ‘complicated’, but since it is repeatable, it is defined only as being ‘complicated’. Raising a child is the ultimate example of ‘complex’ endeavors. One can raise a child successfully, but the rules and traits applied, do not apply for raising another child. Kurtz and Snowden have a similar definition of five contexts in decision-making defined by the nature of the relationship between cause and effect. Four of these – simple, complicated, complex, and chaotic – require leaders to diagnose situations and to act in contextually appropriate ways. The fifth – disorder applies when it is unclear which of the other four contexts is predominant.

Real estate per se is not complex in a complexity scientific sense, but rather complicated. Greenfield projects sometimes are even simple. Decision-making in real estate as well as in development can be ‘complex’. Because all property is leveraged and due to real estate capital markets, being highly imperfect, it is legitimate to say, that the global real estate economy is ‘complex’ in the sense of complexity science.

Prigogine and Stengers have made the following observation: ‘In far-from-equilibrium conditions, we find that very small perturbations or fluctuations can become amplified into gigantic, structure-breaking waves; which is called the ‘Butterfly-Effect’. In 2014 the amount of institutional-owned real estate, while large, was still one order of magnitude smaller than overall debt outstanding and global equity market capitalization. The institutional-owned real estate was equal to 12% of equity market capitalization and 9% of total debt outstanding. Small allocation shifts from debt and equities can and have produced large relative movements in real estate capital flows. For example, if all investors shifted just 1% of their government bond portfolio to real estate, it would imply a substantial 5% increase in institutional-owned real estate value.

The author of the blog explains in a complexity scientific sense how emergent properties, qualities, patterns, or structures, arise in complex adaptive systems from the interaction of individual elements. They are greater than the sum of the parts and are difficult to predict by studying the individual elements. Emergence is the process that creates a new order. She also emphasizes – with this example – that within CAS – complex adaptive systems agents and constraints co-evolve Both systems are modifying each other: This means irreversibility. One cannot go back The past will only repeat by accident. Retrospective coherence is very dangerous. One can never understand with hindsight and by looking back since the past will not repeat.