Cities drive the modern global economy. Here's what's in store for them.

The world's tallest building, the Burj Khalifa, dominates the Dubai skyline.

The next 20 years of global urban change is already peeking through the clouds.

Cities are the engine of economic performance and the stage for some of the greatest environmental and social challenges of our time. The McKinsey Global Institute estimated in 2016 that the world’s most economically powerful cities alone account for 75 per cent of global GDP. When cities change, these figures suggest, not just our lifestyle but our economy and businesses change.

Right now, that change is speeding up. The torrent of people flowing into and between cities is one reason: the United Nations (UN) says 54 per cent of the world’s population now lives in cities, and the UN expects that figure will rise to more than two-thirds by 2050.

Economic and business trends will shape our cities, too. New York and London have boomed in the past third of a century, due in part to the dizzying rise of the global finance industry. Not just Beijing and Shanghai, but every city in China has been transformed by that nation’s expanding economy, and similar stories can be told throughout East Asia.

Similarly, in the United Arab Emirates, Dubai has soared skyward as the country diversifies away from oil and into services.

An even more powerful influence may be advancing technology. That is likely to result in more dramatic changes for our urban centres over the next two decades than in the past four.

Predicting the evolution of cities can be a tricky business. New York and London were written off in the mid-1970s; popular films such as 1981’s Escape From New York painted such cities as descending into dystopian hellholes, just when they were on the cusp of a turnaround.

Other changes are more easily forecast. The science fiction writer William Gibson once observed: “The future is already here; it’s just not evenly distributed.”

To predict how our urban centres may change as they rise, densify and change, we can look at one of the smartest cities of them all: Singapore.

The ideal city: tall, green and handsome

Singapore is a city of the future that is already here. Its urban plan pre-empted many of the obstacles other cities are grappling with today, such as sustainable development, and its stringent traffic management policy is aided by a highly efficient public transport system.

Singapore has focused on addressing other major infrastructure challenges, such as housing. In the 1960s, it was dotted with squatters’ settlements. Today, more than 80 per cent of Singaporeans live in government-built housing, known as Housing and Development Board (HDB) flats, and of Singapore’s households headed by a Singaporean citizen or permanent resident, the home ownership rate has jumped from 59 per cent in 1980 to 91 per cent in 2015.

Dr Liu Thai Ker served as the architect-planner and CEO of HDB for 20 years and  is credited as the master planner of modern Singapore. Now chairman of the Centre for Liveable Cities and director at RSP Architects Planners and Engineers, Liu says Singapore’s reputation as a city of the future rests on the urban planning principles of its past.

“The future is already here; it’s just not evenly distributed.” William Gibson

Liu’s urban plan for Singapore took inspiration from the alternating black and white checks on a chess board. High rises and public housing are interspersed with parks, schools and sporting fields.

“It’s densely populated but it never feels chaotic or oppressive and that’s not by accident,” explains Liu, who also consults on urban planning to more than 20 cities in China.

“We don’t have one huge mess of high-rise buildings.”

This land-scarce island city-state is ranked the most sustainable city in Asia and one of the world’s greenest. It requires that all developers give back the same amount of green space their sites remove.

As the city has grown taller, so too have its vertical gardens. Now cities like Xiamen in China’s south-eastern Fujian province are adopting the same approach, Liu says.

“A lot of people feel like they haven’t left Singapore when they go there.”

How work changes cities

At least two different trends are beginning to affect how cities accommodate their workforces. The first is that large companies such as Australian banks have begun reducing office space per worker by designing offices around “activity-based working”.

This system provides flexible workspaces on the assumption that more staff will work from different locations, including interstate offices and their own homes.

At the same time, the global trend of co-working has been bringing workers from smaller businesses together. Start-ups, in particular, are using co-working to keep costs low, preferring to rent desks and meeting rooms rather than entire offices.

Research from global real estate company CBRE shows there were close to 8000 co-working spaces available around the world in 2015, up from just 75 in 2007.

While London and New York lead the way with at least 120 co-working spaces each, growth is predicted across the Asia-Pacific, where cities such as Shanghai, Singapore, Sydney, Melbourne and Tokyo are collectively home to a total of about 300 spaces.

Dr Henry Chin, head of research, Asia Pacific, at CBRE in Hong Kong, says the growth in start-ups across the region may disrupt traditional real estate through demand for greater flexibility, shorter leases and fit-outs that are conducive to collaborative work.

Green space meets the Singapore skyine“We’re seeing a higher level of supply of office real estate in the market, and landlords are thinking about how to attract tenants and how to unlock more value,” he says.

“This means they are getting more creative in office fit-outs to attract the co-working community.”

The number of start-ups in Singapore grew from 24,000 in 2005 to 42,000 in 2013. India is expected to have more than 10,500 start-ups by 2020 and Chin says the number in Hong Kong was up to 1600 by the end of 2015.

“Landlords are taking notice,” he says.

Meanwhile, the effects of online technology loom over another type of property – retail. Most property firms are reluctant to suggest that online shopping and new delivery technologies such as driverless vehicles and drones could impact retail space.

However, an August 2016 study for the British Council of Shopping Centres declared that for retailers, “the future holds dramatic changes in physical formats ... those shopping places unable to withstand the pressures of competition may tire, decline or die out in the most extreme cases.”

Will robots on city roads reduce overall volume?

Predicting the effects of technologies such as driverless transport can be an uncertain business.

Self-driving vehicles are being trialled on city roads around the world but are not yet in normal road use. Experts expect they will deliver on their potential, however, partly because of the sheer volume of money being invested in them – US$847 million in 2016 alone, on research firm CB Insights’ estimates.

How they change the price and efficiency of city transport, traffic congestion and even our workplace decisions all depends on how these vehicles are used when they become common, probably sometime in the next 20 years.

Australia’s first self-driving bus was trialled in Perth in September 2016; and driverless vehicle software start-up nuTonomy is testing a fleet of driverless taxis in Singapore.

Mercedes-Benz unveils its F 015 driverless model in 2016A report from McKinsey & Company predicts that driverless cars will gain mass adoption by around 2040. Car makers believe it could happen earlier, with the likes of Google, Mercedes, Audi and Toyota already testing driverless vehicles.

Driverless cars have the potential to cut accident rates, improve mobility for the elderly and disabled and increase the liveability of cities by narrowing traffic lanes and transforming car parks into green public spaces.

Of course, all this depends on there being fewer cars on the road. McKinsey & Company notes that driverless cars can create a major new industry segment it calls “on-demand mobility services” worth up to US$1.5 trillion globally. That sector would encourage cheap travel via what would essentially be driverless taxis, a sector that ride-hailing firm Uber hopes to dominate.

Or will our daily commutes become worse?

One side effect could be heavier traffic than ever before.

Scott Benjamin, an expert on intelligent transport systems at engineering firm WSP Parsons Brinckerhoff, warns that “in 20 years when we have zero-occupancy vehicles cruising around waiting for you to finish your meeting or looking for a park, we’ll have double the trips on the road as we would have had previously”.

Alan Davies, a transport and urban development consultant who blogs at The Urbanist, points out that driverless cars will be able to pack themselves more closely together on the road.

He believes they can reduce traffic congestion, as long as true ride-sharing takes off. McKinsey thinks that could happen; it estimates up to one in 10 new cars sold in 2030 will be a shared vehicle.

The new price of new infrastructure

Driverless cars may reduce the revenue collected from traffic fines by eliminating the risk of human error. Governments, however, may soon claw back some of this by charging fees to drive on major roads during peak hours in cities.

This is already happening in places like London, Singapore and Stockholm, as a way to cut congestion and the associated costs of lost time and carbon emissions.  

The first electronic congestion charging system was introduced in Singapore in 1998; it led to a 16 per cent drop in peak hour traffic by 2000.

In London, a congestion charge cut car use in the city by almost 20 per cent from 2000 to 2009. However, the London Chamber of Commerce and Industry said a drop in retail takings meant that 25 per cent of businesses were considering moving outside the city zone.

“You really have to think carefully about how you enable people to get around.” Marion Terrill, Grattan Institute

Marion Terrill, transport program director at the Grattan Institute, says congestion fees can wring more from existing infrastructure. People often think of them as a way of collecting revenue to build new roads, she says, but in fact they drive better judgements about when, where and how to travel in the city.

“We’re all sharing the same infrastructure,” she notes, “and people who pay to use it at particular times get the benefit of driving on a less congested road.

"It’s one thing to have a city of three million or four million, but once you’re getting to six million or seven million, you really have to think carefully about how you enable people to get around.”

Cities of home delivery

The appetite for home delivery looks set to increase in cities everywhere. That’s nowhere more obvious than in the rise of companies like UberEATS, Delivery Hero and Deliveroo. Such companies are expanding across the globe, bringing a range of culinary options to the doorsteps of hungry, time-poor consumers.

Research from Euromonitor predicts the global market for home delivery and takeaway food could reach US$105 billion by 2018, up 16 per cent from 2015. UberEATS delivers food in about 50 countries and launched in Sydney in July 2016, with a choice of home-delivered dishes from 100 restaurants.

Berlin-based Delivery Hero, which recently acquired Middle East-based Talabat.com, is valued at US$3.1 billion. Meanwhile, UK-based Deliveroo was founded in 2013 and employs about 20,000 riders to deliver food across more than 100 cities in 12 countries, including Australia.

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Levi Aron, country manager of Deliveroo in Australia, believes the rise in home deliveries will change the shape of cities.

“It’s already started to impact the way we live and how we build our cities,” he says. “Over the past few months, we’ve been working with property developers and leasing agents who are changing the way we think about the urban jungle to accommodate this major shift.”

Alongside Deliveroo’s core delivery service, it recently launched RooBox in London, which provides partner restaurants with the use of fully equipped, off-site kitchens in areas with limited restaurant supply but high demand for delivery. Its concept has the flexibility to work in locations such as car parks and development sites, provided there is access to power, water and drainage.

The city in flux

As forecasting expert Philip Tetlock has pointed out, predicting the future isn’t easy.

For cities, with their complex webs of building, transport, retail, office and logistics systems and their deep connections to their national economies, forecasting is even murkier.

Yet we understand enough about the new needs of businesses and consumers and the even newer developments in technology to know that cities will change dramatically in the next two decades.

How East Asia's cities will change the world

China’s population is expected to reach 1.4 billion in 2030, an increase of 4 per cent from 2015. Research from ANZ shows the country’s growing middle class will more than double its spending by the time this happens, lifting its consumption as a portion of GDP to almost 50 per cent.

While this represents a significant new driver of demand for goods and services, it will also require innovative solutions to the urban challenges that the huge population will present.

“The growing population in China is going to force private as well as government parties to think of very new ways of controlling things like pollution and mobility,” says Vikas Kumar, chair of discipline and director of the Emerging Market Internationalization Research Group (EMIRG) at the University of Sydney.

“This is something the Western world has never been able to do because it has not been so imperative. Innovation will arise out of the unique contextual features in places such as Beijing, Delhi and Jakarta. Due to the growing population, I think Asian cities will leapfrog others in many aspects of life.”

Supertalls - the new skyscraper

Buildings taller than 300 metres – so-called supertalls – will become far more common.

The cylindrical Shanghai Tower stands tallThe first 50 supertalls took 80 years to complete, starting with New York’s Chrysler Building in 1930. From 2010, new anti-sway technology drove designs skyward, and the next 50 supertalls appeared within just five years.

The new frontier is megatalls over 600 metres high, such as the 632-metre tall Shanghai Tower and Dubai’s Burj Khalifa – at 828 metres, it’s the world’s tallest building, but will soon be topped by Saudi Arabia’s kilometre-high Jeddah Tower, which is due for completion in 2020.

Read next: Life in the Pearl River Delta: Inside the world’s biggest megacity


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February 2017
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