status of cities in 15 years

GROWING ROLE OF CITIES: OVERVIEW OF THELATEST URBAN TRENDS AND WHY THEY MATTER FOR BUSINESS

KASPARAS ADOMAITIS, SENIOR CITY ANALYST

UGNE SALTENYTE, CITY ANALYST

WHY ARE CITIES IMPORTANT?

GROWING ROLE OF CITIES

SUB-NATIONAL DIFFERENCES

THREE KEY TAKEAWAYS

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Country (emerging markets)

Urban extents (sq km)

% Total land area in urbanextents

% of total population in urban extents

China 380,588 4% 50%

Indonesia 42,204 2% 36%

India 223,398 7% 28%

Nigeria 17,298 2% 33%

50% of China’s 1 billion+ population lives in only 400,000 sq km – area equivalent to Sweden

As urbanisation rate is higher and urban sprawl more pervasive, urbanised areas generally cover larger share of land mass in developed countries

GROWING ROLE OF CITIES: OVERVIEW OF THE LATEST URBAN TRENDS AND WHY THEY MATTER FOR BUSINESS

Country (developedworld)

Urban extents (sq km)

% Total land area in urbanextents

% of total population in urban extents

USA 794,416 9% 85%

UK 60,054 24% 85%

Japan 108,927 29% 80%

Germany 62,513 18% 70%

Urban world: small land areas are home to huge consumer markets

Source: NASA Socioeconomic Data and Applications Center (SEDAC)

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It pays off to focus on key cities: in most markets, growth of consumer expenditure in largest cities will outpace country growth

In Sub-Saharan countries (Kenya, Cameroon, South Africa, Nigeria), the growth in dominance of major cities will be particularly fast: their share in total country consumer spending will rise by 5-8 percentage points

Growing role of major cities in emerging marketsCurrently important cities will only grow in importance over 2014-2030


-2% 0% 2% 4% 6% 8% 10%

MexicoBrazil

PhilippinesPakistan

IranArgentina

EgyptAzerbaijan

ChileSaudi Arabia

PolandBolivia

ColombiaRomania

IndiaChina

AverageMalaysiaMorocco

NigeriaRussia

IndonesiaTurkey

United Arab EmiratesJordan

South AfricaVietnam

KenyaCameroon

BelarusThailand

Share of five major cities in total country consumer expenditure, % change over 2014-2030

Emerging markets



5

India Brazil

Benefits of market growth can be captured by focusing on a few locations in a countryContribution to growth in consumer spending by city (2014-2030)


Total country growth: US$1,6 trillion

Total growth in 20 key

cities: US$350 billion

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Total country growth: US$760 billion

Total growth in 20 key

cities: US$340 billion

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Only a small number of locations can account for substantial share of market growth. In India, only 20 locations will add up to 22% of total country growth. In Brazil, 20 cities will account for 45% of total country growth.



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Emerging economies are attractive for investment as rapidly growing consumer markets;

At the same time, emerging markets face huge inequality between sub-national regions, making some areas substantially more attractive over others;

Due to regional inequality, a few well-developed cities/dense urban conglomerations in emerging markets can even show spending patterns similar to developed world, while the rest of the country is struggling with poverty.

Sub-national differences matterWorld’s countries with largest regional differences


Brazil India Turkey

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7

Bangalore (most affluent)

Varanasi (least affluent)

Total population,(million, 2014)

9.3 1.5

Forecast population growth(total growth over 2014-2030, %)

47 20

Population aged 0-14(% of total, 2014)

23 32

Number of households with income over US$55,000 (2014)

75,000 1,100

Average expenditure per capita, (US$, 2014)

2,694 556

Spending on food and drinks(% of total, 2014)

23 35

Possession of washing machine,(% of households, 2014)

26 2.5

Possession of car(% of households, 2014)

22 9.2

Possession of Internet enabled PC(% of households, 2014)

37 22

Five fold difference in consumer expenditure per capita

Different demographics (see pop aged 0-14) reveal different sources of population growth (immigration in Bangalore vs natural growth in Varanasi)

Ownership of cars and access to internet reveal completely different lifestyles

Illustrating city-level differences: India




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Developed countries face lower regional inequality, yet the differences still can be easily observed;

In world’s countries with lowest inter-regional differences, France, Germany and Japan, less affluent cities reach only 70-76% of per capita consumer spending level of the most affluent city

Sub-national differences matter even in relatively homogenous markets

World’s countries with lowest regional differences


France Germany Japan

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Paris (most affluent)

Lille (least affluent)

Total population,(million, 2014)

12 1.4

Forecast population growth(total growth over 2014-2030, %)

6.3 3.9

Population aged 0-14(% of total, 2014)

20 20

Number of households with income over US$55,000 (2014)

3,022,000 249,900

Average expenditure per capita, (US$, 2014)

28,277 21,707

Spending on food and drinks(% of total, 2014)

13 14

Possession of washing machine,(% of households, 2014)

94 97

Possession of car(% of households, 2014)

67 81

Possession of Internet enabled PC(% of households, 2014)

90 80

Expenditure per capita in Lille is only 77% of expenditure per capita in Paris

Despite high consumer income in Paris, ownership of passenger cars is considerably lower in the city

Lille metropolitan area is growing at considerably lower rate than Paris, the country’s leading city

Illustrating city-level differences: France




10

Urbanisation and economic growth generally means world’s major cities economically will become even more important over next 15 years, as they continue to concentrate population and income.

Even in large countries it can pay-off to focus on several major cities. For example, in Brazil and India, doing business in merely 20 locations will help to 25-50% of total market growth.

Inter-regional differences in emerging markets can be particularly large in terms of consumer expenditure patterns, population demographics, or household lifestyle.

Three key takeaways: why are cities important?



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About Passport Cities

New cities data highlights demographics and patterns of consumer spending in 1,150 major cities globally, and dives into penetration of basic consumer appliances and technology items in urban households. To learn more about Euromonitor International’s Cities research please visit: http://go.euromonitor.com/PassportCities-Home.html

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