A US$1.5 trillion global opportunity
Brand new cities are taking root across the globe, from the world's first linear city rising off the Saudi Arabia desert to a new metropolis in the Indonesian archipelago. We estimate over US$1.5trn of groundbreaking projects and pull together insights from our global sector teams to select companies leveraged to the build phase. Urbanization has driven prosperity within successful cities thus far, but we identify five critical themes that we believe will power cities into the future:
- Livable cities
- Interconnected cities
- Smart cities
- Green cities
- Live, work and play communities
Indonesia: Two cities and one sustainable future
In relocating the capital city to Nusantara, the Indonesia Government aims to redistribute growth while addressing myriad challenges including overcrowding, congestion and severe land subsidence in Jakarta. Indeed, UBS Evidence Lab scenario analysis shows that up to 28% of North Jakarta could potentially be submerged in the next 20-30 years, displacing ~3 million residents. These push factors combined with the pull of a new city of the future should underpin fresh demand for homes and amenities in Nusantara. Our interactive model estimates US$92 billion of available built environment projects for developers.
Johor/Singapore and GBA: Two other regions on the rise
Not all new cities are built from scratch; existing ones can also break the growth mold through collaborations. The Johor-Singapore Special Economic Zone is capitalizing on existing connections and complementarities. Johor could get additional exports, foreign direct investment (FDI) and tourism, while Singapore benefits from higher productivity, land and labour optimisation. We estimate gross domestic product (GDP) growth could be 0.2-0.4ppt higher in Malaysia, and 0.2- 0.6ppt higher in Singapore over the next 10 years. The GBA is driving a redistribution of talent, capital and cargo flow from Guangdong-HK-Macao to satellite cities thereby unlocking a new phase of economic growth and wealth creation.
