Change is notoriously difficult to predict, especially when looking decades into the future.
But help is at hand, McKinsey have just published their Urban predictions of the future: “Urban World: Mapping the economic power of cities”. It predicts where the balance of power will shift in the next 10-15 years. Whilst we ought to be wary of the accuracy of such long term forecasts and predictions, they can nevertheless provide a good directional overview.
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We already sense and know that the balance of power is shifting to countries like; China and India and that the world’s population is shifting from the countryside to the city, which will shape the future, centres of power around the world. However there are some interesting stories emerging that might not be altogether obvious….
- global urban population is growing by 65 million annually
- more than half of the world’s population now lives in towns and cities
- only 600 urban centres, with a 1/5 of the world’s population, generate 60% of global GDP ($30 tn)
- in 2025, 600 cities will account for about 60% of worldwide GDP—but the cities will be different
- a shift in focus is taking place from economies as a whole, to cities within them
Here the interesting story is that Istanbul enters the top 25 city rankings for 2025 on a number of dimensions: as a city whose average, annual, household income will be over $20,000, whose population will be youthful (a high proportion below 15 years of age) and with a sizeable population (over 10m, which it already is).
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Attractive earning power is set at the $20,000 household income threshold, as it is commonly used by companies targeting households with purchasing power beyond the basics.
This means that Istanbul would rank better than Rio de Janeiro and be hot on the heels of Moscow, in terms of numbers of households with attractive earning power and indirectly have greater levels of disposable income.
250 million new households will form in the top 600 Cities, as the trend toward smaller household sizes takes a hold, driven by demographic shifts and changing ways of living. The size of the average household will decline to 3.7 by 2025 (from 4.4 people per household in 2007).
With this earning-power and household proliferation, comes demand for housing and property-related goods and services, as well as attracting business to set up in these centres, thereby attracting workers and further investment.
Istanbul property market – Conclusion
These projections can help guide important property investment decisions. For the overseas property investor, with a long-term investment horizon, understanding the next global hotspot can mean the difference between buying overseas property early in the upturn, or paying too much, as property prices appreciate when demand takes hold. Turkey is a place to watch and presents exciting opportunities on the property investment front.
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NB. Based on McKinsey research using MGI Cityscope –a database of more than 2,000 cities around the world offering insights into the evolution of the global economy and its demographics,household structure, and incomes. The report focuses on one scenario of how the urban world is evolving that provides a sense of direction for decision-making.Tags: economy, European property, investment, Istanbul