An Irishman's Diary

Call me superstitious, if you like

Call me superstitious, if you like. But the most ominous sign yet of a crisis in the property market comes from, of all things, horse-racing, writes Frank McNally.

Two years ago, as you probably recall, an Irish horse called Numbersixvalverde won the English Grand National. In last year's edition, he finished only sixth. Now comes news that he will miss this year's race entirely, and is out for the rest of the season.

The horse was famously named after his owner's holiday home in Portugal. As such, he expressed the zeitgeist perfectly back in 2006 when, at the height of the housing boom, every other Irish person you met seemed to have an overseas investment.

Not all of us caught that wave. My own adventures in continental property began and ended with a tenner each way on Numersixvalverde the year he won. But I suspected even then that the horse was a metaphor. I'm glad now to be able to say I got out of him at the top of the market.

READ MORE

Creditable as his sixth placing was last year, it confirmed for me the beginnings of a slow-down in the housing sector as a whole. His subsequent injury was a further omen, as was the reported setback to the horse's recovery last October (possibly reflecting concerns about the imminent Budget).

If he really had been a house, no doubt estate agents would have claimed he had bottomed out then and that he would experience a modest upturn in the first quarter of 2008.

Indeed, as recently as last week, he was trading at 33-1 for this year's Aintree showpiece. It looked like value at the time. But fortunately I resisted the temptation. My heart goes out to those who did invest in the ante-post market, and are now experiencing negative equity.

Although probably biblical in origin (ref Numbers, 22:28), the phrase "straight from the horse's mouth" is especially popular in Ireland as a way of measuring quality of information.

Presumably this reflects the national love of equestrian sports. Certainly, the phrase's meaning been often been brought home to me at Cheltenham, when some hitherto unsuspected Irish nag romps to victory. Whereupon, as its excited supporters gather in the winners' enclosure, it emerges that everybody in the village of Ballydehob knew for a certainty since last November that the horse would win, and had put their 100 per cent mortgages on it at 66-1.

It is at times like that you doubt the reality of the much-hyped, computer-driven "knowledge economy", in which distance is supposed to be irrelevant, and the entire world has been turned into a village, thanks to e-mail, skype, social networking sites, and whatever you're having yourself. The suspicion lingers that physical proximity to information sources is still what really matters. And now comes a survey confirming this - from, of all places, Google.

Yes, those kings of knowledge dissemination, who at this very moment are beaming pictures of the top of your house to interested parties on the other side of the globe, have produced proof that the key issue in the quality of information available to a company's workforce is who sits next to whom in the office.

Google conducted the study among its own staff, using "internal prediction markets" - a practice in which employees are encouraged to bet on the company's future performance under particular headings.

Such markets are increasingly popular in the corporate world, because they sometimes produce more accurate results than the professionals who are paid to make predictions. In this exercise, however, Google's main focus was on learning how information flows inside an organisation.

The names of staff were removed from the survey. But everything else that might influence information exchange - friendships, memberships of e-mail lists, involvement in the poker club, etc - was factored in. As, this being Google, were the global satellite co-ordinates of every desk in the open-plan offices in the study.

And, what do you know? It emerged that the dominant influence on predictions was not which department you worked in, which social circle you moved in, or which line boss you reported to. It was who you sat beside.

Google's blog has a graphic showing one office floor as a collection of clusters - green clusters where staff were making profits from their predictions, and red ones where they weren't. The biggest green blob comprised about 16 staff members, who were clearly in the know. But most of the blobs were red, and composed of staff were just as clearly out of the loop.

Whether you were sitting beside the right people was secondary to the survey's main finding, however - which is that, for effective communication, there is no substitute for physical proximity.

Radical an idea as this might seem to geeks, Google's chief executive apparently knew it three years ago when he counselled: "The best way to make communication easy is to put team members within a few feet of each other. No telephone tag, no e-mail delay, no waiting for a reply." So there you have it. Even in the age of file-sharing, physical space-sharing is still key. The obvious conclusion to be drawn is that, like the property boom, the whole remote-working thing is over. My advice to anyone looking for an investment is to sell your holiday home in Portugal now (along with the horse, if you have one) and put your money in offices instead.