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.