According to the United Nations, more than half of the world’s population already lives in towns and cities, and this figure is set to rise to 68 percent by 2050, as people migrate from rural to urban areas in pursuit of greater economic opportunities.
“Cities are currently home to four billion people. They are growing rapidly at a rate of around 200,000 people per day,” says Guy Grainger, chief executive at real estate advisory firm JLL. “By 2050, when the world’s population is forecast to reach ten billion, that means 6.8 billion will be living in urban areas.”
Furthermore, while most urbanization is taking place in Africa and Asia, the trend is not restricted to regions with high population growth rates. It is a truly global phenomenon due to more relaxed migration policies and increased connectivity. While this creates opportunities for real estate investors, it also places a great deal of responsibility on managers to ensure the cities they are helping to create are built to last.
Resilient buildings, resilient cities
Three-quarters of the world’s carbon emissions and half of the world’s waste currently comes from cities, with at least 40 percent of that stemming from real estate. “It is imperative that we strengthen cities’ resilience through design, construction and operation of well-connected, functional green buildings and communities, as well as investment in resilient infrastructure that can withstand the challenge of mega trends like urbanization or climate change,” says Roxana Isaiu, director, real estate, at GRESB.
Nuveen undertakes a detailed analysis of any urban environment to assess its sustainability credentials before making an investment. “We look at vulnerability to climate change, air quality and how carbon intensive the grid electricity is,” says the firm’s head of sustainability, Abigail Dean. “We then also drill down into areas such as transport strategy to see how well a city will be able to cope with an influx of people.”
Tech key to sustainable urbanization
Technology has a key role to play in responsible real estate, of course, with the advent of smart cities a dominant trend. Innovative urban development and tech solutions are helping secure quality of life and decrease resource consumption to create livable human environments and foster social inclusion. And with the right level of investment discipline applied, Grainger believes the rise of urbanization can be a sustainability force for good.
But it is vital that businesses and policymakers come together to find solutions to provide living, working and amenity spaces that can promote a sharing lifestyle, he explains. “Mixed-used development and placemaking solutions need to be inclusive while satisfying a range of different tastes and price points. And it is crucial to future-proof these developments incorporating new technologies and sustainable elements to ensure they survive the test of time. We need to set new KPIs for business where social value is a material element of achieving economic return.”