The cities of tomorrow — an opportunity today
By Christophe Donay, Head of Asset Allocation & Macro Research at Pictet Wealth Management
We are witnessing a remarkable world population regime shift unfolding over the next three decades, which in our view, will be characterised by four trends:
1 — The global trend, with UN projections that will see the world population grow from seven to nine billion by 2050 (i.e. 0.8% average annual growth)
2 — The local trend, as population growth discrepancies harden across zones, with the Middle East showing the second fastest growth at 1.1% annually, over twice the rate of North America, and Africa doubling from one to two billion, while much of Europe and Asia will experience population declines.
3 — Climate migration, where climate change will impact migration flows with the creation of an estimated 250 million climate migrants across the globe, driven by rising sea levels and water scarcity.
4 — Increased urbanisation, with the world on an accelerating urbanisation trend, which is amplified by all three trends.
Today, 55 per cent of the world’s population lives in urban areas and according to the United Nations, by 2050 nearly three out of every four people will be working, living and commuting in and around urban centres (1). As cities grow in population size, they will need to find ways of maximising limited resources.
As policymakers around the world are preparing for these shifts, investment in new technologies around energy efficiency, water, health, transport and residential and commercial infrastructure is on the rise. And it is not only public money going into these investments. Private investors are also moving increasingly into this space, having recognised the long-term potential for financial returns presented. What’s more, the public and private sectors are also collaborating together on these initiatives that offer a win-win proposition. A great example of this is in New York City, where the Mayor’s Office put together a group of companies who would contribute funding and technological expertise in transforming disused phone boxes into a city-wide network of super-fast, free Wi-Fi kiosks in exchange for a share in advertising revenues.
What is genuinely remarkable is that initiatives like these are truly global, from New York to Singapore, London to Dubai. In 2013, H.H. Sheikh Mohammed bin Rashid Al Maktoum announced a project to transform Dubai into a ‘smart city’, with the purpose of providing seamless services to the public through six pillars and 100 initiatives across transport, communications, infrastructure, electricity, economic services and urban planning (2). Beyond addressing basic human needs, governments are also setting themselves goals to improve the wellness and happiness levels of city dwellers. To this end, the first pillar of the Government of Dubai’s 2021 plan is “the people”, with the aim of establishing a “city of happy, creative and empowered people”(3) as the plan’s key focus. The cities of tomorrow will go beyond being merely functional to become life and experience enhancing.
Such pioneering examples of visionary economic resolution are found in many Middle Eastern economies, where the recognition of the future energy regime shift away from fossil fuels and oil has served as a call to action to leaders looking to ensure the future economic prosperity of their citizens.
For centuries, cities have served as engines of growth, accounting for nearly 80 per cent of global GDP today. However, they are also responsible for 70 per cent of global greenhouse gases and often have high levels of pollution (4). This is where the wellness focus of policymakers is key, as today’s highly-connected citizens grow increasingly informed and vocal in their demand for clean air and water, access to education and health services. This makes securing sustainable solutions and services to support long-term urban development planning a key priority for policymakers in both the developed and developing world.
(1) UN May 2018
(2) https://government.ae/en/about-the-uae/the-uae-government/smart-uae/smart-dubai
(3) https://www.dubaiplan2021.ae/dubai-plan-2021/
(4) WorldBank 2018
