How Rapid Urbanisation is Shaping the Future

The world is constantly changing, and many of these shifts have the potential to alter the investment landscape.

While some of these changes can be temporary and fleeting, others can be powerful, transformative “megatrends” that shape how society is organized at a fundamental level.

One such megatrend that has been in place for decades is the rapid rate of population growth in urban areas – and while it’s been highly influential thus far, we’ve likely only seen the beginning of its formative impact on the global economy.

An Intro to Rapid Urbanisation

Today’s infographic comes to us from iShares by BlackRock, and it highlights the case for rapid urbanisation as being one of the most important overarching trends to watch in markets over the long term.

It’s a trend that originated in developed economies in the 21st century, as people transitioned from agricultural work to factory and service jobs.

In these developed economies today, cities are major sources of innovation and wealth creation, and the World Bank estimates that over 80% of global GDP is now generated in cities.

A Global Shift

Over the coming decades, the large-scale role of cities will become even more amplified as rapid urbanisation spills over to the rest of the world.

Billions of people – especially in Asia and Africa – will be seeking opportunities in cities over the coming decades. Between 2018 and 2050, the global urban population will increase from 55% to 68%, adding another 2.5 billion people to cities around the world.

Nearly 90% of this growth will be in Africa and Asia, with India alone adding 416 million new people to its cities – more than any other country in the world over this timeframe.

The Dawn of the Megacity

People are not only flocking to cities, they are flocking to megacities – urban conglomerations with more than 10 million people.

In just 40 years, the total amount of megacities will quadruple, gaining nearly 600 million residents in the process:

With billions of new people living in urban areas – and many of them living in megacities – we will have to rethink how our cities are designed and engineered.

And as this happens, the city as we know it will be revolutionised.

The Urban Opportunity

Rapid urbanisation will create both opportunities and challenges for society, and a plethora of investment possibilities in the process.

As global cities become more integrated with technology, new business models will emerge as cities become smarter, denser, and more connected.

These potential opportunities include:

• Smarter cities
  Cities will embrace technology to improve services and infrastructure, adding tech-driven features like smart lighting or real-time traffic updates.
• New infrastructure
  Cities and companies will invest heavily to build next generation infrastructure, such as data centers, green energy, and citywide WiFi.
• A focus on personal security
  With higher crime rates in cities than rural areas, governments will employ elevated levels of surveillance on citizens in cities. Increasing connectivity means that every activity is logged and monitored.
• New services
  As cities become more connected, non-traditional players – such as cybersecurity experts or cleantech engineers – will be needed as a part of city planning processes.
• No car ownership
  A lack of space and the rise of autonomous cars will mean fewer people will own a car, preferring to use ‘summon-able’ services instead.
• New healthcare systems
  As population density grows to unprecedented levels, existing healthcare systems will need to be radically overhauled to deal with this influx.

Rapid urbanisation will have a wide-ranging impact on global economics, demographics, and society as a whole.

As rapid urbanisation and other megatrends collide and feed off each other, there’s no doubt that even more thematic investment opportunities will be created.

Ever since the first towering spires broke through the clouds in New York and Chicago, skyscrapers have remained a potent symbol of economic might.

The tallest buildings require vast amounts of materials, expertise, and capital to make them a reality, but the cities that add these landmarks to their skylines gain prestige and send a powerful message to competing economic centers.

Skyscraper Construction in 2018

Where are the most skyscrapers popping up? Let’s take a look at regional hot-spots around the world.

Note: For the purposes of this article, “skyscraper” will refer to buildings 656 feet (200 meters) or more in height.

China is Flying High

For well over two decades, China has led the world in skyscraper construction, and 2018 was no exception.

The country’s fixation on urban growth and continued economic success is producing tall buildings at a staggering rate. Last year, a mind-boggling 89 skyscrapers were completed in 28 different cities around China.

To put this building boom into perspective, China completed more skyscrapers in one year than New York City’s entire stock of 656ft and taller buildings.

In 2018, no city reached for the stars quite like Shenzhen. The city, which is a hub of China’s high-flying tech sector, now has the second-most skyscrapers in the world, surpassed only by Dubai.

Shenzhen isn’t just building a lot of skyscrapers, it’s building extremely tall ones too.

In 2017, for example, the ribbon was cut on the massive Ping An Finance Center, which is currently the 4th tallest building in the world. Last year alone, four new towers cracked the 1,000ft (300m) barrier.

Asia, Rising

While China’s scale is hard to beat, other cities in the region are also undergoing dramatic changes, particularly in Southeast Asia. Malaysia and Indonesia completed a combined 13 new skyscrapers, and the Vincom Landmark 81 was added to Ho Chi Minh City’s growing roster of unique skyscrapers.

While there are two skyscrapers under construction in Japan – one in Tokyo and one in Yokohama – none of them were completed last year.

A New Era of American Skyscrapers

After a two-decade lull in skyscraper construction, the United States is embracing taller buildings again. Last year alone, the U.S. added 14 new skyscrapers into the mix, particularly in New York City, where construction cranes dot the horizon. In the past decade, NYC has added 25 new skyscrapers to its iconic skyline.

This trend is showing no signs of slowing down. Between now and 2022, 44 skyscraper projects are expected to be completed in the United States, with the vast majority being built in the Big Apple.