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By: Pavel Marceux

Almost every single country is seeing a gradual rise in urban households, with the trend especially pronounced in emerging markets with strong economic expansion. Countries such as Nigeria and China are witnessing unprecedented speed of city development, while in developed nations existing mega cities are stretching out to cover more households with suburban areas.

The city-driven phenomenon of single-person households, bigger uptake of household appliances and digital products, and more appealing property markets are just some impacts of more urbanised households. Companies able to take early-mover advantage can benefit from new audiences. Dairy and meat producers in China, Amazon’s internet retail operations in India, urban developers in London, and a gin brand targeting urban hipsters are just some examples of companies leveraging urbanised audiences. As urban areas expand and envelop more households, property prices typically rise in the area. This process, sometimes under the guise of gentrification, is pricing out low- and middle-income consumers from local home ownership.

CHALLENGES

Household surges create economic and demographic bottlenecks

As the number of urban households continues to surge across many economies, residents and state structures are facing rising challenges. Poverty, the decline in the concept of the family, higher unemployment, lower fertility rates, and the increased need for social, environmental and economic development are the unfortunate consequences of urbanisation.

Of the world’s top 10 fastest-growing cities in terms of households over 2017-2030, seven are in extremely low-income markets (Bahrain, Qatar and China have been able to demonstrate sustainable population expansion). Countries like Cameroon, Pakistan and Nigeria are already facing many urban obstacles, such as congestion management, overpopulation, widespread urban poverty, pollution, and housing shortages.

 

Top 10 Cities by Growth in Households

Low and middle-income consumers priced out of urban hubs

Property prices in major cities are expanding, alongside the general cost of living (utilities, services, foodstuff). Living in a capital city or urban hub, such as London, New York, Tokyo or Shanghai, is already becoming unaffordable to most local inhabitants. This is creating a housing crisis across many countries, which is only set to worsen by 2030, as central cities become accessible only to the wealthy.

In China, the refusal of developers to make new homes more affordable, as prices continue to rise, is creating huge empty districts. According to China’s Southwestern University of Finance and Economics, more than one in five homes in the country’s urban areas is vacant. Willing buyers are priced out of the market. These conditions are turning urban landscapes into speculative financial instruments, rather than generating communities and prosperity.

OPPORTUNITIES

Digital opportunities more abound among urban homes

There remains a major gap in the access to digital services between rural and urban households worldwide. Even in developed markets like the USA, rural homes are behind their urban counterparts in access to broadband, tablets and smartphones. The surge in urban households worldwide has been accompanied by a correlated rise in household broadband penetration. Urban homes have been the primary driving forces behind digital trends that have reshaped retailing and consumption in cities.

One such trend is “cocooning” – living a fully domesticated lifestyle by receiving goods and services at home without needing to leave the house. E-commerce, takeaway foods, and home entertainment are the big winners. Another trend is sofa shopping, when consumers ignore their PCs to shop on mobile devices at home for comfort. This also leads to multi-screening, the use of multiple screens (TV, mobile, tablet) to consume information.

Urban households drive stronger rental and mortgage markets

One of the primary facets of urbanisation is rising property prices, as incoming consumers drive demand for housing in a more densely populated area. This in turn stimulates the entire real estate market, as homeseekers look to mortgages and rentals for affordable solutions.

Growth in Mortgaged Homes and Urban Homes

Countries experiencing some of the fastest rates of urbanisation (such as India, Nigeria and Pakistan) are also among the most dynamic growth markets for mortgages and rentals.

 

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