INSIGHTS AND RESEARCH

Integra Digest: Urban Globalisation – 2nd part

With rapid urbanisation occurring globally, it is necessary for significant urban planning to take place. While statistics are difficult to gather, with only estimates available regarding the number of people moving from rural to urban areas annually, it is still clear that the volume and concentration of urban populations is not slowing down in the slightest. Nonetheless, the available knowledge highlights some important areas needing improvement and investment:

  • More people live in urban areas than not across the globe.
  • 1.5 million people moved into urban areas per week back in 2015, this number is expected to double by 2050, if not to exceed this projection.
  • Capital cities remain the most densely populated while newly urbanised cities are quickly catching up.
  • While urban globalisation is a huge megatrend, only 1% of land is defined as a built-up area, meaning population density within that 1% of land is extremely high.
  • The popularity of employment continues to fall in agricultural sectors.
  • The definition of “urban” cities is not globally agreed upon, each country declares its own criteria for classifying a city as ‘urban’ – meaning data can vary significantly by country.

The main attraction of urban cities for both investors and residents is that they harbour a unique ecosystem – they achieve more than the sum of their contents. This ability to extract more financially and socially than combined parts provides a rather attractive symbiosis, one which is not, unfortunately, immune to combustion.

As urban populations grow, to some extent uncontrollably, communities and governments face big challenges to develop infrastructure to account for the value of incoming residents. Worryingly, infrastructure and housing does not grow at the same velocity as populations do because of constrained capacity and finance. Realistically speaking local and national government budgets are not as effective at responding, at an ideal speed, which is why private investment is so important to bringing solutions to immediate problems urban communities and businesses face. This is a fine opportunity for investors with attractive returns, returns which are not only commercial but also government backed.

Given that United Nations’ expectation for urban globalisation is that more than 68% of the total world populations will reside in urban areas by 2050 is it vital to remember that sustainability is key to a prosperous future – key to investment returns and also key to sustaining such positive population metrics. The UN’s eleventh Sustainable Development Goal (SDGs) is to “make cities inclusive, safe, resilient and sustainable.” As part of our ethos at Integra Groupe, we invest in companies which actively seek to sustain SDG goals, moreover to actively employ ESG investment across all areas of their business model.

Integra Groupe

August 4, 2022