Cities
Investing Megatrend: How Rapid Urbanization is Shaping the Future
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.
| Region | Urban share of population (1900) | Urban share of population (2016) |
|---|---|---|
| United States | 40% | 82% |
| Japan | 12% | 91% |
| Western Europe | 41% | 80% |
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.
| Rank | Country | Urban population growth (2018-2050) |
|---|---|---|
| #1 | India | 416 million people |
| #2 | China | 255 million people |
| #3 | Nigeria | 189 million people |
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:
| Year | # of Megacities | Population | % of Urban Population |
|---|---|---|---|
| 1990 | 10 | 153 million | 7% |
| 2010 | 23 | 370 million | 12% |
| 2030 | 41 | 730 million | 14% |
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.
Chart of the Week
Global Shutdown: Visualizing Commuter Activity in the World’s Cities
Amid the COVID-19 crisis, cities are dramatically slowing down. Today’s chart demonstrates the impact of lockdowns on commuter activity worldwide.
Staying Put: The COVID-19 Commuter Decline
Every day, millions of people worldwide rely on public transport networks to get around. But in times of crisis, bustling cities with high volumes of commuter traffic can come to a dramatic halt.
Today’s chart breaks down daily data from Citymapper’s Mobility Index, according to trips planned on the transport app across 41 select cities.
The results paint a unique picture of how social distancing and lockdown measures are impacting commuter and economic activity in major urban hubs.
Cities With the Biggest Drops in Activity
As the government response to the COVID-19 pandemic intensifies and people are urged to stay home, transit activity is dropping everywhere.
However, some areas are seeing more of a reduction in activity than others. Where has activity declined the most over the month?
| Rank | City | Country | 04-Mar | 11-Mar | 18-Mar | 25-Mar | Total Change (%) |
|---|---|---|---|---|---|---|---|
| #1 | Vienna | 🇦🇹 Austria | 128% | 92% | 9% | 6% | -122% |
| #2 | Lisbon | 🇵🇹 Portugal | 128% | 108% | 24% | 12% | -116% |
| #3 | Istanbul | 🇹🇷 Turkey | 117% | 103% | 20% | 10% | -107% |
| #4 | Barcelona | 🇪🇸 Spain | 105% | 86% | 6% | 4% | -101% |
| #5 | Brussels | 🇧🇪 Belgium | 107% | 96% | 15% | 7% | -100% |
| #6 | São Paolo | 🇧🇷 Brazil | 112% | 113% | 33% | 12% | -100% |
| #7 | New York City | 🇺🇸 USA | 104% | 85% | 17% | 7% | -97% |
| #8 | Madrid | 🇪🇸 Spain | 100% | 65% | 5% | 4% | -96% |
| #9 | Los Angeles | 🇺🇸 USA | 108% | 81% | 23% | 13% | -95% |
| #10 | Melbourne | 🇦🇺 Australia | 113% | 110% | 53% | 20% | -93% |
*Note: Data measures the % of city moving compared to 100% baseline.
Overall, Vienna and Lisbon are the cities with the biggest average drop in commuter activity over the past few weeks. This decline in mobility is correlated with a spike in the proportion of COVID-19 cases in the population:
- Austria
March 4: 2.6 per million
March 25: 586 per million - Portugal
March 4: 0.4 per million
March 25: 232 per million
That said, not every city is seeing a precipitous decline in activity — let’s look at those next.
Standing Still, or On Guard
Cities that saw lower decreases in commuter activity over recent weeks can generally be slotted into three categories:
- Cities that were already on or near shutdown (Seoul, Milan)
- Cities that have so far avoided major impacts from the virus (St. Petersburg)
- Cities that successfully mitigated spread (Singapore)
Here are the 10 cities on the list that saw the lowest changes in activity:
| Rank | City | Country | 04-Mar | 11-Mar | 18-Mar | 25-Mar | Total Change (%) |
|---|---|---|---|---|---|---|---|
| #1 | Seoul | 🇰🇷 South Korea | 48% | 43% | 41% | 37% | -11% |
| #2 | Hong Kong | 🇭🇰 China (SAR) | 50% | 52% | 48% | 37% | -13% |
| #3 | Singapore | 🇸🇬 Singapore | 90% | 88% | 79% | 62% | -28% |
| #4 | Milan | 🇮🇹 Italy | 43% | 10% | 5% | 3% | -40% |
| #5 | Tokyo | 🇯🇵 Japan | 63% | 54% | 42% | 21% | -42% |
| #6 | St Petersburg | 🇷🇺 Russia | 114% | 114% | 85% | 69% | -45% |
| #7 | Moscow | 🇷🇺 Russia | 112% | 113% | 75% | 54% | -58% |
| #8 | Rhine-Ruhr | 🇩🇪 Germany | 75% | 72% | 28% | 15% | -60% |
| #9 | Stockholm | 🇸🇪 Sweden | 97% | 83% | 34% | 32% | -65% |
| #10 | Lyon | 🇫🇷 France | 75% | 97% | 6% | 4% | -71% |
*Note: Data measures the % of city moving compared to 100% baseline.
St. Petersburg is still seeing commuter activity at 69% of normal levels as of March 25th, as the proportion of confirmed COVID-19 cases in Russia remains low, at roughly 3.4 per million.
Milan has the lowest activity of any city at 3%, and has been in shutdown for most of the month.
Although Singapore’s total COVID-19 cases grew from 18.8 to 95.4 per million, it still has 62% commuter activity. Interestingly, Singapore is one of the few countries that has been able to properly control and manage its COVID-19 outbreak.
Biggest Weekly Declines
As the month progressed, various cities showed stark one-week declines in commuter activity based on official healthcare recommendations and growing case numbers.
After a government lockdown announced on March 9, Rome experienced the sharpest decline of -75% commuter activity in the week from March 4 to March 11. Currently, there is only 5% activity compared to usual, similar to Milan.
In the second week of March, COVID-19 cases in France jumped fourfold, from 27.3 per million to 118.4 per million people. As a result, Lyon saw a whopping -91% drop in commuter activity—going from 97% on March 11 to 6% on March 18.
Over the past week, as cases in Australia reached 95 per million, Sydney and Melbourne exhibited the highest average declines at -36% and -33% in commuter activity respectively.
Full List of 41 Cities
Here’s the full list of cities, courtesy of Citymapper.
| City, Country | March 4 | March 11 | March 18 | March 25 | Total Change (%) |
|---|---|---|---|---|---|
| Vienna, Austria | 128% | 92% | 9% | 6% | -122% |
| Lisbon, Portugal | 128% | 108% | 24% | 12% | -116% |
| Istanbul, Turkey | 117% | 103% | 20% | 10% | -107% |
| Barcelona, Spain | 105% | 86% | 6% | 4% | -101% |
| Brussels, Belgium | 107% | 96% | 15% | 7% | -100% |
| São Paulo, Brazil | 112% | 113% | 33% | 12% | -100% |
| New York City, U.S. | 104% | 85% | 17% | 7% | -97% |
| Madrid, Spain | 100% | 65% | 5% | 4% | -96% |
| Los Angeles, U.S. | 108% | 81% | 23% | 13% | -95% |
| Melbourne, Australia | 113% | 110% | 53% | 20% | -93% |
| Amsterdam, Netherlands | 98% | 86% | 13% | 6% | -92% |
| Washington DC, U.S. | 97% | 82% | 15% | 6% | -91% |
| San Francisco, U.S. | 96% | 65% | 9% | 6% | -90% |
| Boston, U.S. | 97% | 77% | 16% | 7% | -90% |
| Chicago, U.S. | 97% | 92% | 16% | 7% | -90% |
| Montréal, Canada | 103% | 104% | 31% | 14% | -89% |
| Paris, France | 95% | 89% | 8% | 6% | -89% |
| London, UK | 100% | 91% | 36% | 12% | -88% |
| Manchester, UK | 100% | 91% | 42% | 13% | -87% |
| Sydney, Australia | 106% | 99% | 56% | 20% | -86% |
| Mexico City, Mexico | 109% | 110% | 53% | 23% | -86% |
| Rome, Italy | 91% | 16% | 6% | 5% | -86% |
| Copenhagen, Denmark | 97% | 80% | 11% | 11% | -86% |
| Berlin, Germany | 93% | 86% | 26% | 12% | -81% |
| Birmingham, UK | 99% | 91% | 45% | 18% | -81% |
| Toronto, Canada | 97% | 91% | 32% | 19% | -78% |
| Vancouver, Canada | 94% | 89% | 38% | 16% | -78% |
| Philadelphia, U.S. | 89% | 85% | 22% | 13% | -76% |
| Monaco, Monaco | 81% | 50% | 12% | 7% | -74% |
| Hamburg, Germany | 85% | 72% | 20% | 12% | -73% |
| Seattle, U.S. | 80% | 51% | 19% | 8% | -72% |
| Lyon, France | 75% | 97% | 6% | 4% | -71% |
| Stockholm, Sweden | 97% | 83% | 34% | 32% | -65% |
| Rhine-Ruhr, Germany | 75% | 72% | 28% | 15% | -60% |
| Moscow, Russia | 112% | 113% | 75% | 54% | -58% |
| St Petersburg, Russia | 114% | 114% | 85% | 69% | -45% |
| Tokyo, Japan | 63% | 54% | 42% | 21% | -42% |
| Milan, Italy | 43% | 10% | 5% | 3% | -40% |
| Singapore, Singapore | 90% | 88% | 79% | 62% | -28% |
| Hong Kong, Hong Kong | 50% | 52% | 48% | 37% | -13% |
| Seoul, South Korea | 48% | 43% | 41% | 37% | -11% |
*Note: Data measures the % of city moving compared to 100% baseline.
The COVID-19 pandemic is affecting everything from the stock market to the environment. With cities actively working to keep populations in isolation and healthy during this time, it may take a while before commuter activity returns to normal.
Business
Flying High: The Top Ten Airline Routes by Revenue
This visualization tracks the high-value routes that generate the most revenue for airlines – primarily links between the world’s financial centers
Flying High: The Top 10 Airline Routes by Revenue
The airline industry is a tough business. Profit margins are narrow, airplanes are expensive to run and maintain, and government regulation and taxation can be onerous and unpredictable.
In addition, demand can stall by the outbreak of disease, recession, war, or terrorism. So when a company has a winning airline route, it makes all the difference to a company’s bottom line.
Today’s visualization uses data from OAG Aviation Worldwide, which tracked the airline routes that generated the most revenue from April 2018 to March 2019.
Top 10 Highest Revenue Routes by Airline
North American routes dominate the global rankings. However, it is the connections from the U.S Northeast and Europe that generate the most revenue and often the most delays.
Only one route breaks the billion dollar barrier: British Airways’ service between London Heathrow Airport (LHR) and New York’s John F. Kennedy Airport (JFK).
| Airline | Airport Pair | Countries | Total Revenue US$ 2018/19 |
|---|---|---|---|
| British Airways | JFK-LHR | 🇺🇸🇬🇧 | $1,159,126,794 |
| Qantas Airlines | MEL-SYD | 🇦🇺 | $849,260,322 |
| Emirates | LHR-DXB | 🇬🇧🇦🇪 | $796,201,645 |
| Singapore Airlines | LHR-SIN | 🇬🇧🇸🇬 | $735,597,614 |
| United Airlines | SFO-EWR | 🇺🇸 | $689,371,368 |
| American Airlines | LAX-JFK | 🇺🇸 | $661,739,368 |
| Qatar Airways | LHR-DOH | 🇬🇧🇶🇦 | $639,122,609 |
| Cathay Pacific Airways | HKG-LHR | 🇭🇰🇬🇧 | $604,595,063 |
| Singapore Airlines | SYD-SIN | 🇦🇺🇸🇬 | $549,711,946 |
| Air Canada | YVR-YYZ | 🇨🇦 | $541,122,509 |
Air Canada’s route between Vancouver and Toronto bottoms out the list with $541 million of revenue in 2019. Low population density, high infrastructure costs, and an aviation industry that is essentially an oligopoly, are all factors driving up ticket costs in Canada.
North America, Top 10 Highest Revenue Routes by Airline
Here’s a look at only the top-grossing routes connected to North America, including the prior ones that made the global list.
| Airline | Airport Pair | Countries | Total Revenue US$ 2018/19 |
|---|---|---|---|
| British Airways | JFK-LHR | 🇺🇸🇬🇧 | $1,159,126,794 |
| United Airlines | SFO-EWR | 🇺🇸 | $689,371,368 |
| American Airlines | LAX-JFK | 🇺🇸 | $661,739,788 |
| Air Canada | YVR-YYZ | 🇨🇦 | $541,122,509 |
| British Airways | BOS-LHR | 🇺🇸🇬🇧 | $523,527,241 |
| Air France | JFK-CDG | 🇺🇸🇫🇷 | $486,378,698 |
| United Airlines | LAX-EWR | 🇺🇸 | $479,908,312 |
| Cathay Pacific Airways | JFK-HKG | 🇺🇸🇭🇰 | $475,514,451 |
| Delta Air Lines | LAX-JFK | 🇺🇸 | $465,130,366 |
| British Airways | LAX-LHR | 🇺🇸🇬🇧 | $452,136,502 |
Transcontinental routes dominate the domestic market with LAX–JFK appearing twice in the ranking for both American and Delta Air Lines.
Asia, Top 10 Highest Revenue Routes by Airline
Despite Asia’s rise as an economic superpower, there are no routes that break the billion dollar barrier. Singapore Airlines’ Singapore (SIN) to London’s Heathrow (LHR) tops the list, generating $736 million in 2019.
| Airline | Airport Pair | Countries | Total Revenue US$ 2018/19 |
|---|---|---|---|
| Singapore Airlines | SIN-LHR | 🇸🇬🇬🇧 | $735,597,614 |
| Cathay Pacific Airlines | HKG-LHR | 🇭🇰🇬🇧 | $604,595,063 |
| Singapore Airlines | SIN-SYD | 🇸🇬🇦🇺 | $549,711,946 |
| Vietnam Airlines | SGN-HAN | 🇻🇳 | $488,487,259 |
| Cathay Pacific Airlines | HKG-JFK | 🇭🇰🇺🇸 | $475,514,451 |
| Japan Airlines | OKA-HND | 🇯🇵 | $447,224,346 |
| Singapore Airlines | CGK-SIN | 🇮🇩🇸🇬 | $436,905,694 |
| Japan Airlines | FUK-HND | 🇯🇵 | $431,457,469 |
| Singapore Airlines | SIN-MEL | 🇸🇬🇦🇺 | $414,276,407 |
| Cathay Pacific Airlines | HKG-SIN | 🇭🇰🇸🇬 | $389,910,239 |
The routes that dominate Asia connect the financial hubs of London, New York, Singapore, and Hong Kong. There are also two domestic routes in Japan, connecting both Fukuoka (FUK) and Okinawa (OKA) to Tokyo’s Haneda (HND) airport.
Africa, Top 10 Highest Revenue Routes by Airline
At the top of the ranking in Africa is Johannesburg (JNB) to Dubai International Airport (DXB) with revenues of $315 million. Dubai has become an important hub for high value flights arriving and departing Africa, a position that may prove profitable as air traffic on the continent increases in coming years.
| Airline | Airport Pair | Countries | Total Revenue US$ 2018/19 |
|---|---|---|---|
| Emirates | JNB-DXB | 🇿🇦🇦🇪 | $315,678,326 |
| British Airways | JNB-LHR | 🇿🇦🇬🇧 | $295,167,492 |
| Saudi Arabian Airlines | CAI-JED | 🇪🇬🇸🇦 | $242,155,949 |
| TAAG Angola Airlines | LAD-LIS | 🇦🇴🇵🇹 | $231,155,949 |
| South African Airlines | JNB-CPT | 🇿🇦 | $184,944,128 |
| Emirates | CAI-DXB | 🇪🇬🇦🇪 | $181,392,011 |
| Emirates | CPT-DXB | 🇿🇦🇦🇪 | $176,743,498 |
| Air France | ABJ-CDG | 🇨🇮🇫🇷 | $174,986,272 |
| British Airways | CPT-LHR | 🇿🇦🇬🇧 | $174,605,201 |
| Emirates | MRU-DXB | 🇲🇺🇦🇪 | $163,952,609 |
Despite the smaller earnings compared to larger markets, some airline companies see the potential for growth in Africa. Virgin Atlantic will fly a route between London’s Heathrow and Cape Town in South Africa, while Qatar Airlines acquired a stake in RwandAir.
Financial Hubs
The cities that appear in the top revenue ranking are revealing. Since business and first class travelers are such an important revenue driver, it makes sense that connections between the world’s financial hubs are delivering big value to airlines.
As Asian and African economies continue to evolve, what route could be the next billion dollar route for airlines?
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