Prudential Investment Management, the asset management arm of Prudential, has released a new white paper that lays out the potential investment opportunities that accelerating urban development will create around the world.
The white paper, entitled 'The Wealth of Cities', notes that an estimated 60 to 70 million people will be added to the global urban population annually for the next 30 years, and offers a range of long-term investment ideas across both public and private vehicles, including:
- Creating technologically advanced wired cities: By 2020, the number of global internet users is projected to double to four billion people, resulting in a global opportunity for public and direct private investments in IT infrastructure, broadband, data centres and cell towers.
- Expanding transportation capacity: As new cities in emerging markets reach populations in excess of five million, the expansion of primary airports, major seaports and high-speed inter-city railways will present investable opportunities.
- Launching anti-pollution initiatives: About half of the world's urban population is exposed to unhealthy levels of air pollution. Companies providing solutions like clean energy, waste management and water treatment serve as attractive investment candidates.
- Capitalising on interest in the urban lifestyle: New mixed-use developments, both residential and commercial, are highly attractive investments as people and companies alike become increasingly attracted to urban lifestyle.
- Growing retail outlets and logistics support: One billion new urban middle class consumers in emerging markets now have money to spend on retail purchases, allowing for direct and diversified investment opportunities.
"Understanding how megatrends affect asset classes is crucial as CIOs move toward a long-term strategic portfolio management approach that takes them beyond simply beating short-term benchmarks," said David Hunt, CEO of Prudential Investment Management.
"As we considered urbanisation, we drew from expertise in our global investment businesses specialising in public and private fixed income, public equity, and real estate, to examine its impact across asset classes and share our best thinking on new investment ideas for capitalising on the long-term opportunities created by expanding cities around the world."