The megacity of the future is smart

"By 2030, two thirds of the world’s population will live in cities; many of them in megacities – conglomerations with ten million inhabitants or more. The trends of tomorrow are being born in these cities and we will need to find answers to the enormous challenges they pose,” says Axel Theis in the latest Allianz Risk Pulse entitled “The megacity state: the world’s biggest cities shaping our future.” The member of the Board of Management of Allianz SE responsible for Global Insurance Lines and Anglo Markets continues: “Our main question is going to be, ‘How can we find the right balance between growth, quality of life and climate protection?”

29 and counting:  The number of megacities with more than 10 million inhabitants is expected to grow to over 40 by 2030.

29 and counting:  The number of megacities with more than 10 million inhabitants is expected to grow to over 40 by 2030.

There are already 29 megacities and the number is growing fast. The concentration of inhabitants, buildings and infrastructures is rising exponentially as available space continues to shrink. Many of these cities are located in low-lying coastal regions, which are especially vulnerable to the effects of extreme weather and climate change. At the same time, life expectancy is increasing in many regions of the world; above all in Asia. In 2030, 15% of the world’s population will be older than 60. This trend is also taking place in megacities.

In its report, Allianz addresses the implications of these developments and describes the role of insurance. Theis explains, “As living conditions in large metropolises change, so do the needs of their inhabitants and we, as insurers, are going to have to meet them. For example, in the case of managing the risk of natural catastrophes or supporting infrastructure projects.”

Explosive growth of megacities

Today’s urban spaces are growing enormously and blasting through many dimensions. In 1950, only New York and Tokyo exceeded a population of 10 million; in 2030, there will be over 40 megacities. As early as 2020, the greater Shanghai area could even become a “giga city” with 170 million inhabitants – more than double the population of Germany. “The growth of megacities right now is primarily an Asian phenomenon. Six of the ten cities with the largest populations are in that part of the world,” says Jay Ralph, member of the Board of Management of Allianz SE and responsible for global asset management among other things. “Estimates indicate that the Asian middle class will grow to 1.75 billion by 2020. By the end of 2014, 11%of our assets under management for customers originated in this region. The percentage is expected to increase further. ”

So what is the appeal? The prospect of jobs and a better infrastructure are currently attracting young people to urban areas. This migration is leading talents, opportunities and investments to concentrate in the cities. According to the OECD, it is only a matter of time before some metropolises have more economic clout than entire countries.

In the megacity of the future more and more people will live in smaller households because the traditional family unit is becoming increasingly disbanded. The demand for living space will therefore rise substantially. This challenge can be countered with innovative technologies, such as 3D-printed houses.

Many of the new megacities will be in Asia.

Many of the new megacities will be in Asia.
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Short distances are the name of the game

Many researchers view the city of the future above all as a compact entity characterized by short distances. “The ideal city will be made up of many autonomous centers,” says Thomas Liesch of Allianz Climate Solutions. “People will live and work in their respective districts, which will in turn save them a lot of time and energy. Fewer cars mean more space for pedestrians and a network of green spaces will connect the individual neighborhoods. This sort of development would improve the climate and leave more space for leisure activities and food production.”

With resilience in mind, academics, politicians and business representatives have developed a vision of a Smart City. The nervous system of tomorrow’s intelligent city will be based on the Internet: electricity, transportation as well as supply and disposal systems will all be electronically linked. Buildings will produce their own electricity and even store it, for example using high-powered battery storage systems. This will result in a decentralized energy-generation and storage system, which will have the additional benefit of mitigating the impact of power outages. Automatic traffic control systems will respond to real-time data, reducing traffic and redirecting it if necessary. The workplace and the home will merge. Supply chains will be optimized.

Will this vision will become reality? There is certainly no one-size-fits-all model according to which life in the city of the future will work. However, as the Allianz report shows, many interesting solutions and approaches are already in place to address the most pressing challenges.

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer:


Bettina Sattler
Allianz SE
Phone +49.89.3800-16048
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Petra Brandes
Allianz SE
Phone +49.89.3800-18797
Send email

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