Skip to content
Site search
shanghai landscape-unsplash
Markets & Geopolitics

Our connected future – and what it means for cities

I've outlined in my recent book "The Future is Asian" how this 21st century will be dominated by Asia. We are already seeing a rising "Asianisation" of the world, driven by China's demand for commodities but also how the continent has exported its peoples and ideas.

Parag Khanna, Founder and Managing Partner, FutureMap
10 November 2019

I've outlined in my recent book "The Future is Asian" how this 21st century will be dominated by Asia. We are already seeing a rising "Asianisation" of the world, driven by China's demand for commodities but also how the continent has exported its peoples and ideas.

This new civilizational order links 4.6 billion people from Saudi Arabia to Japan, from Siberia to Australia. We are also seeing other emerging markets develop along the lines that we are seeing Asia develop. These concepts can apply just as much to South and Central America or to Africa. They may even ultimately apply to the West.

Asianisation certainly presents its own set of challenges for real-estate professionals. The scale of Asian cities is so vast that they present a whole different landscape, literally, from what we've seen created in the Western world. It's not unusual for a megacluster of cities to develop in Asia with a population of 61 million people, as you find in the Greater Bay Area around Hong Kong, Shenzhen and Guangdong, for instance.

The well-developed Asian megacity of the future does not have just one Central Business District (CBD). It could have four CBDs, several city centres, and a very diversified network of amenities, infrastructure and services. That's a challenge but also provides a lot of opportunity for the property sector.

It would be healthy for developing nations to evolve along these lines. At the moment, too much of the focus in many emerging markets is on one capital: think of Jakarta, Manila, Bangkok and how they dominate the economies of the countries they call home. The situation is the same in Africa, around Nairobi, Cairo or Lagos, as well as in Latin America, where Mexico City, Lima, Santiago and Buenos Aires draw the best and brightest minds to their centres of economic and social activity.
These nations, not yet at the peak of their potential, need to dissipate their population and investments. This will also help ease some of the greatest burdens on megacities, which often do not have the infrastructure necessary to accommodate their vast collections of people.

Take Indonesia. You can't have everybody living in Jakarta. Yet in the world's fourth-most-populous nation, you have one city that matters, the "Big Durian" – and some would say it stinks. It certainly doesn't work very well.

Thank goodness their long-delayed Mass Rapid Transit (MRT) metro has finally opened as of late March, with a 16-kilometre line. It has taken six years of construction and numerous delays, not to mention US$1.1 billion in investment. But it cuts a two-hour commute crammed along choked roads down to a matter of minutes, if you are lucky enough to live along that line, it will be a small price to pay. The Indonesian government estimates that congestion costs the country US$4.6 billion a year in economic losses. They're barely out of the gates and there's no end to how much more Indonesia needs to do.

Likewise, there is insufficient investment in dissipating the population of most developing nations. You have to invest more into second- and third-tier cities and above all invest in the connectivity to the airport, rail system, highways, fibre networks, WiFi and telecommunications - the old and the new ways of getting around.

The Philippines is a good example of a nation that has been getting this right. Looking at its provincial growth rates, you can see a higher pace of development in the peripheral areas around Manila and Cebu City.

There's another good illustration in Thailand. The only game in town used to be Bangkok. You're now getting a lot of construction and incentives in second-tier cities, both north and south, extending the wealth and the centres of activity well beyond the capital.

We also have to think about what kind of real estate we want to develop in the future. I'm thinking here of issues revolving around our quality of life. The East and the West are converging in this respect: the next generation of millennials don't necessarily want to sit in offices all day. They want telecommunicating, mixed-use developments and pedestrian communities.

That's a lifestyle that has taken hold in some European cities, especially. Residents of Asian and emerging-market nations should be accorded similar ambitions. Even though their incomes are lower, their aspirations are similar. These developing nations have the opportunity to produce urban growth in a new vein, that captures these new ways of working, where our home life, commercial life and community life combine.

In China, you have a lot more options. You don't have to live in Shanghai or Beijing any more. As a result, you are starting to see large-scale service economy cities rise in China. People want to have less pollution, less congestion and less stress in their lives. So, places like Changsha and Kunming are also a labour-migration pull.

You have a major conurbation with 100 million people in the 16 cities of "Cheng-Yu", the combination of Chongqing and Chengdu. The Pearl River Delta, in the process of being rebranded as the "Greater Bay Area," has 62 million souls across nine main cities. The 31 cities around Wuhan and the middle reaches of the Yangtze River boast a population of 136 million yet are broadly dispersed along spokes connecting those smaller urban hubs.

This, with the right investment, can take place at a smaller scale in other nations. There needs to be a balancing between the most populous and second-most-populous tiers of cities. India is also developing in this direction. Delhi and Mumbai are too large. We are seeing smaller, but still large, economies develop around cities such as Bangalore and Hyderabad, each with a distinct niche, whether driven by tech, a port or an industry cluster. Then you need joined-up thinking at a regional and national level to link them.

The extension of this thinking may make you wonder why we would want to live in a city at all. There are good reasons why we don't work as coders, say, living on a farm in rural Myanmar. You need the ports and the WiFi and the fibre, the hospitals, universities and schools, and above all you need a diversified economy. It's hard to do these things outside cities.

I hope that the rise of decentralised economies can help reduce the wealth gap between urban elites and the population as a whole. Inequality that festers is not going to lead to a bright future. Yet inequality is staggeringly high in many developing counties. That's not surprising given the breakneck speed of development. But over time there is going to be less tolerance for this inequality.

If we don't see the kind of dissipation of investment that benefits the country as a whole, and not just the capital cities, that is potentially going to be very negative politically. But I believe that in today's connected world, we can build toward that optimistic future, successfully.