Blog: You, us, everyone

Costs and Benefits of Urbanization
Urbanization offers several benefits. Telecommuting and infrastructure investment offer ways to maximize them. Urbanization has both benefits and costs. In a market economy, the trade-off between benefits and costs determines the level, speed, and pace of urbanization. Urbanization enhances productivity and economic growth in both rural and urban sectors. 

Managing and planning a city
Cities occupy just 2% of the earth's land surface, but they are home to more than half of the world's population and generate 80% of all economic output. And their dominance is growing: by 2045, an extra 2 billion people will live in urban areas. The expansion of urban centers is sure to put pressure on infrastructure, resources, and the environment.

More than half, 60%, of the economic growth in cities comes from the growing population, and 40% comes from improved labor productivity. To run efficiently, urban areas need better transport, water, energy, and waste management infrastructure, logistics facilities and public services from health care to education. Combatting poor air quality is also a priority for metropolises—especially in China—while waste disposal and treatment are becoming bigger problems as population sizes grow. 

Smart cities will combine what is good for the planet with what is good for the economy. Eventually, this is likely to mean high speed trains and driverless cars. Consultancy McKinsey forecasts that up to 15% of passenger vehicles sold globally in 2030 will be fully autonomous.
 
Addressable market

• Smart Cities:

Immediate: Of the USD81 billion that was spent on technology in 2020, nearly a quarter went into fixed visual surveillance, smart outdoor lighting, and advanced public transit, according to the International Data Corporation. 
Longer-term: The Global Commission on the Economy and Climate estimates that future cities will combine what is good for the planet with what is good for the economy. Investing in lower-emission public transport, using more renewable energy, and increasing efficiency in commercial buildings and waste management in cities could generate savings in the region of about USD17 trillion worldwide by 2050. 

• Automotive sector:

Revenues: The automotive sector could nearly double its revenues to USD6.7 trillion thanks to shared mobility (car-sharing, e-hailing) and data connectivity services (including apps and car software upgrades).

Investment opportunities in urban growth 

1. Education: The schools of tomorrow programme. This aims to improve education for young people in the poorer and more violent areas of cities. 
2. Transport: Expansion of the metro system. New roads and railroads into city centers are required to reduce congestion. 
3. Waste: Power plants can be set up near cities using methane gas (biogas) from rubbish. A facility installed in Rio consumes 30 tonnes of rubbish a day and produces enough electricity for 1000 homes. 
4. : Cities in general have the highest incomes per head in a region which is providing impetus for people to take-up their share. A growing number of employed people are generating self-sufficient virtuous circles for the service industries, such as finance, banking, and retail

These investment opportunities are best suited for long-term investors.