City Building On The Fast Track
The magnitude of the task facing the built environment in absorbing this wave is extraordinary:
- To accommodate the new work force, Grade A office stock is projected to grow by more than 10 per cent per year over the next decade, from 90 million square meters today to more than 220 million square meters.
- Consumer demand will reshape the retail landscape. While there are now 1,000 modern shopping malls across the BRICS, by 2020 there could be well over 2,500. That’s a new mall opening every two days.
For BRICS cities to take up the mantle of ‘world winning,’ they will have to show skills in innovative and intelligent financing, put significant resilience and sustainability strategies in place and demonstrate improving transparency around legal systems, commercial codes and business practices. The race for recognition will accelerate as many more cities seek a place on regional and world stages.
Competing For Finance Or Financing For Competitiveness?
Across the BRICS markets, successful municipalities will be those that manage the demands on their infrastructure while cultivating their appearance to the outside world as attractive investment destinations. Investors are extending their horizons to a range of more than 300 global cities. Robust economic growth rates, deepening real estate transparency and improved quality of real estate stock in emerging and middle-weight cities will be compelling pull factors.
At the same time, investors will track the real estate demands of international corporate occupiers, who are pushing further into new geographies. Only thirty cities account for half the world’s total real estate investment volumes.
The top five cities alone — London, Tokyo, New York, Hong Kong and Paris — account for nearly one-quarter of volumes. Shanghai, Beijing, Moscow, São Paulo and Rio de Janeiro have all become top 30 investment destinations since 2008, while the BRICS’ overall contribution to global real estate investment volumes has increased from less than one per cent in 2004 to approaching 10 per cent in 2011.
In India alone, the market value of investment-grade real estate assets under construction across the office, retail and residential sectors is more than US$160 billion, over 60 per cent of which is residential.
Building Beyond Sustainability To Resilience
Alongside this massive building program, India is making strides on the sustainability of its real estate, which has progressed from two certified projects in 2004 to 292 certified projects in 2011. The quality of office stock is also improving and is increasingly being built to internationally recognized standards.
The property sector recognizes it has an important part to play in creating the conditions to accommodate this shift in economic power and city growth patterns. To fulfill this role, it needs to design spatial footprints that can both absorb growth and meet carbon reduction commitments. It needs to look at the social impact of development as well as its location and design. Finally, it needs to work with city authorities to deliver the sustainable physical and social infrastructure that will best match the needs of residents and businesses.
Urbanization on this scale happens only once. The legacy of today’s real estate development will last for many decades to come.