Urban transformation will continue worldwide in 2014. Urban areas are estimated to be home to 53% of the world’s population in 2014, with the most rapid urbanisation taking place in Asia Pacific and Africa. While marketers are increasingly searching for unexploited opportunities in rising second-tier cities, the world’s largest megacities are far from being pushed out of the picture.
Income and Population Growth in Megacities and Their Respective Countries over 2013/2014
Source: Euromonitor International
Note: Only cities with populations exceeding 15 million are included
Cities of Global Attention
The World Economic Forum recently released its annual Global Agenda report, which pinpoints the growing importance of megacities as one of the top 10 trends for 2014. The report highlights cities as centres of innovation, ideas and wealth creation, thus calling for a better understanding of cities and how they evolve and grow, especially megacities – those urban areas with populations exceeding 15 million.
Indeed, over 2005-2014, the combined share of urban dwellers living in cities with populations exceeding 15 million has risen from 8% to 10% across the world. At the same time, the proportion of the world’s total annual disposable income generated in such megacities has increased from 9% to 11%. This suggests that while negative externalities of living in a megacity do exist and such cities might be yielding to a number of second-tier cities in population growth terms, the world’s largest metropolises continue to be cauldrons of global economic activity.
Developing Megacities on the Rise
The above-mentioned trends are a strong reflection of new megacities emerging in Asia, growing per capita income levels in the developing world and a significant concentration of the most affluent households in megacities. In 2014, the top five megacities in terms of total annual disposable income growth will all be located in Asia, mainly China, with Tianjin, Beijing and Shanghai set to register real growth of 10%, 9% and 7%, respectively, over 2013/2014. Other notable growth markets include Jakarta, Delhi and Manila (6% rise in real annual disposable income each). These megacities should not be overlooked by consumer goods and service providers which are looking for large consumer pools with escalating purchasing power – in 2014, real per capita income growth is forecast to reach 5-6% in Chinese megacities and Jakarta and 3% in Delhi and Manila.
Yet, the global demographic divide persists among the world’s megacities. In 2014, Japanese megacities are forecast to struggle to retain their dynamism. Although Tokyo and Osaka are set to see their populations increase modestly over 2013/2014 (compared to a 0.2% decrease forecast for Japan as a whole), their real annual disposable income growth will lag behind that of other megacities (as well as the 0.8% increase predicted for Japan as a whole).
Meanwhile, New York and London are expected to fare somewhat better in 2014. London will outperform the UK in terms of both population growth and total real annual disposable income, while slightly slower population growth in New York will be compensated by a greater rise in both total and per capita real annual disposable income.