The Rise of Megacities: Will It Be Our Finest Hour?

Rapid and cascading urbanization appears to be our future collective reality. Stepping up to address this demographic change provides a unique opportunity for the real estate industry to demonstrate leadership and help to transform the world for good.

Our world is becoming more urban

According to a 2014 United Nations report, more than half of the world’s population already live in cities. Compare that to 1950, when just 30 percent of the world’s population was urban, and you see just how dramatic the transformation has already been. Today’s urban residents generate more than 80 percent of the global GDP. The top 30 most populous cities in the world have a combined GDP of a staggering $11.8 trillion. And if you aggregate the GDP of today’s top 10 megacities, the amount would exceed that of every country in the world with the exception of the United States and China. Two megacities, New York and Tokyo, would be their own G20 Nations based upon their GDPs. In terms of an economic engine, megacities dwarf all other contributors.

Overall, it is predicted that population growth will add an astonishing 2.5 billion people to the world’s cities by 2050. As urbanization continues, the aggregation in megacities (urban areas that are home to more than 10 million inhabitants) is predicted to accelerate. Currently, there are 28 megacities in the world, compared to just 10 in 1990. By 2030, the world is projected to have 41 megacities.

A looming crisis? Only if we do not shape our future

There are some who are inclined to see the challenges of urbanization as a fait accompli with far ranging implications. My view is we need to temper the voices who assert the rise of megacities will spell our doom and focus our energy on making sure that our response to the megacity trend is a force for good. The naysayers remind us that megacities pose a serious threat to sustainable development in the next few decades. They argue that urban density on this scale exacts a cost on the environment, citing the possibility of scarcer clean water and clean energy, increased pollution and decreased air quality as cities begin to expand. And these are just some of the many health risks that megacities will arguably pose in the future, not to mention urban violence.

Aside from the economic and environment issues, there are the social concerns that arise from rapid population growth and the proliferation of economic inequality. Unemployment and poverty on a significant scale can cause not only diminished living conditions but also stress, unrest, anxiety and disaffectedness.

The depiction of this future is certainly provocative, if not dystopian. But I don’t see these dire predictions as inevitable. I choose a more positive view. Where others see catastrophe, I see enormous opportunity.

It’s time to transform our cities for good

It’s helpful to view the rise of megacities through the lens of the rebirth of the city state. Cities like New York and London have more in common with Shanghai and Dubai than Albany and Liverpool because the great cities of the world are where policies and ideas live and die. That is, what occurs in one megacity on one continent holds lessons for megacities everywhere. Viewed in this context, megacities can serve both as an R&D laboratory for global solutions and as a mechanism for quick adoption of those urbanization strategies that actually work. This paradigm potentially leads to higher qualities of life for a majority of the world’s citizens when compared to the change driven by the nation state model. Think Silicon Valley versus the United Nations.

A call to action for the real estate industry

As an industry, we need to recognize this opportunity and, most importantly, provide leadership to address questions that all megacities will face, such as:

• How do we temper income inequality and minimize poverty and unemployment while still allowing businesses and local economies to thrive?
• What sustainable initiatives and/or global policies will enable developers to build to meet demand in a way that doesn’t harm the environment?
• What infrastructures will allow city governments to deliver needed services more effectively and efficiently? How can mobility be solved?
• What role can technology play in keeping people and resources more closely connected? How will the Internet of things lead to smarter cities and smarter real estate?

These are just some of the big questions that will require creative, inspired solutions. And the stakes couldn’t be any higher. Not to tackle these questions over the coming few years would mean losing the chance to advance the interests of everyone everywhere, and allowing the trend of rising megacities to determine our destinies rather than industry leaders’ helping to create a better future.

We all have a crucial role to play: The real estate industry has much to contribute in these discussions because we see firsthand how the growth and development of cities impact our clients and communities. Our collective understanding of the built environment provides us with the opportunity to provide leadership through this important change. We have the obligation to meet this challenge, find and create value, and help reimagine and shape a brighter future for tomorrow.

For more about the future of urbanization, check out the World Economic Forum’s Industry Agenda Council on the Future of Real Estate & Urbanization.