Emerging-Market Cities Present Growth Opportunity for Companies

Emerging-market cities, such as those in China, India, and Indonesia, will constitute the biggest commercial opportunity in the world in the coming decades, according to a new report by The Boston Consulting Group (BCG).

 

The BCG report says that one-third of the world’s population—2.6 billion people—live in emerging-market cities, and by 2030, that number will increase by an additional 1.3 billion. In contrast, cities in developed markets will add only 100 million new residents in the next 20 years.

 

Beneath these headline figures lie dramatic improvements in the lives of emerging-market urban residents. Already, income levels in emerging-market cities are reaching an inflection point, with their middle-class population expected to rise 70% between 2010 and 2015—affecting everything from where these individuals live to how they consume.

 

As disposable incomes rise, many products previously unattainable by average urban residents are becoming necessities, notes the report. Today, more than 37% of the world’s cars are purchased in emerging-market cities, and sales of luxury autos already rival sales in Germany, Japan, and the United States. This same trend in spending will cause emerging-market cities to account for 30% of global private consumption by 2015.

 

Emerging-market cities will need better housing and infrastructure—most urgently, transportation, water, sanitation, and electricity. Meeting these needs will require an estimated US$30 trillion to US$40 trillion by 2030—the equivalent of 60% to 70% of the total global investment in infrastructure. The strongest driver of infrastructure demand will be population growth, and emerging markets will require an estimated $13.8 trillion in housing investment from 2010 to 2030, with a huge portion of the demand coming from Brazil, China, India, and Mexico.

 

 

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