More Than Half The World Now Lives In Cities

This is according to a report recently released by the United Nations.

Managing urban areas has become one of the most important development challenges of the 21st century.

The report notes that in 1990, there were ten “mega-cities” with 10 million inhabitants or more, which were home to 153 million people or slightly less than seven per cent of the global urban population at that time.

In 2014, there are 28 mega-cities worldwide, home to 453 million people or about 12 percent of the world’s urban dwellers. Of today’s 28 mega-cities, sixteen are located in Asia, four in Latin America, three each in Africa and Europe, and two in Northern America.

Today
Tokyo remains the world’s largest city with 38 million inhabitants, followed by Delhi with 25 million, Shanghai with 23 million, and Mexico City, Mumbai and São Paulo, each with around 21 million inhabitants. Osaka has just over 20 million, followed by Beijing with slightly less than 20 million. The New York-Newark area and Cairo complete the top ten most populous urban areas with around 18.5 million inhabitants each.
By 2030, the world is projected to have 41 mega-cities with 10 million inhabitants or more.

Tokyo will still be largest city in 2030

2030 Projections
Although Tokyo’s population is projected to decline, it will remain the world’s largest city in 2030 with 37 million inhabitants, followed closely by Delhi, whose population is projected to rise swiftly to 36 million in 2030. While Osaka and New York-Newark were the world’s second and third largest urban areas in 1990, by 2030 they are projected to fall in rank to the 13th and 14th positions, respectively, as mega-cities in developing countries become more prominent.

By 2050, the vast majority of the world’s megacities will be in Asia.

What about Singapore? 
Well, we should think about the future of Singapore.  When the Government put out that infamous White Paper of 6million population, the local people screamed and yelled.  But just look at the world around us. Mega-cities are growing rapidly and many more big cities are coming online.

Do we need to become a mega-city as well?  Is there some magic in the 10 million number that gives a mega-city its edge?   The current top global cities in the world like New York and London are also very large.

Since Singapore is such a great place to be in, maybe we should just ramp up infrastructure in a huge way and hope that more people will come here to work and play.

Do not forget that in this world of 7, 8 or 9 billion people as well as many large, huge and mega-cities, even staying relevant would become a challenge to our little red dot.

Happy Investing!

London comes out joint top in 12 Cities, Savills Research

This recent report by Savills is a fascinating read.   If you are interested in global real estate, it is well worth your 30 minutes to go through the entire report.  The data is very well presented, and very informative.  I definitely enjoyed it.

Definition of Top World City
Savills makes it clear that their definition is not merely based on population and size of GDP, but also less tangible factors such as fame, prominence, international reach and 'investibility'.  They are interested in centres of innovation and human endeavour.  In short, they are looking for the 'X' factor.

Savills concludes that it is often a cosmopolitan nature and international outlook that cities globally investible and prosperous.

Pride in Singapore, our Little Island State
I take one step back and read these rankings with a great sense of pride.  We often take Singapore for granted.   Yes, we have issues to confront, however, what makes us so special that we can be ranked joint 3rd in such a survey?  It is worth pondering over this and not lose track of the big picture.  There are more than 450 cities in the world with population greater than 1 million.   In China alone, more than 160 of such cities exist and I am sure all of them are hungry, and they want to beat Singapore.   We are not alone, and nobody owes us a living.

Key Elements that Make a World City 
Figure 14 of the report sums it up.  In terms of global connectivity, we still lag behind London and New York.  In terms of Prominent (proxied by Google hits), New York is way ahead of the pack, not surprising.  Then again, not sure if Savills counted Baidu hits and that of other search engines in China.

Most Active Real Estate Investment Markets 
Even though Singapore is joint 3rd, in terms of volume, we fall to 13th.  This is not unexpected, given our size.  Even by this measure, New York and London are on top.  Size does matter, somewhat.

Look and Feel of the City
These charts are fascinating.  They compare 4 variables; 1) population, 2) persons per ha, 3) number of buildings over 150M and 4) Density/building height.

Look at number of buildings over 150M. London only has 12 buildings over 150M, versus 293 in Hong Kong, 230 in New York and 69 in Singapore.  This confirms that London is still very low-rise.

Look at persons per ha.  We think Singapore is crowded, but we are just middle of the pack.  Even Hong Kong isn't crowded compared to Tokyo and Mumbai!

Write-up on London
The write-up on London (page 18) has a few noteworthy points.

First, risk averse investors have traditionally focussed on low-yielding Central London properties, but the secondary, high-yielding locations may provide more opportunities.  This is consistent with our investment strategy in London.  We have avoided low yielding properties, e.g. those in Zone 1.

Second, London is expected to be amongst the best performers in the coming years across a number of real estate classes that Savills monitor.  Read more here about buying a new-built in London.  On this page, I look at some properties in London that are both central and also a bit further out.

Write-up on Singapore
Savills thinks that the long-term prospects are a good bet, even though in the short term the Government has imposed substantial restrictions to foreign investors.

Conclusion and Predictions
Savills gives 7 predictions of the future.  Let me quote prediction number 7 in full, because it is a good reminder for all of us.

"It seems likely that the cities exhibiting the highest capital and rental growth over the next five years will lie outside this study.  By 2018, we could be looking at 15 or 20 world cities.  The ones to watch include major metropolises in up and coming economies, which include Istanbul, Hanoi, Kuala Lumpur, Jakarta and Bangkok, plus many large, second-tier cities in the same countries that few in the West have ever heard of."

The world is constantly moving and changing.  A stark reminder that things may not always get better.  Singapore may be third today and that is an incredible achievement.  But if we do not forge ahead, we will definitely be overtaken, and fall far behind.

Happy Investing!