Singapore-based urban planning consultancy Surbana Jurong has entered into two deals with an aggregate value of $69.2 million increasing its exposure outside of the city-state and capitalising on the growing urbanisation in emerging market destinations.
In a separate deal, Surbana Jurong, which is an associated firm of Temasek Holdings and state-owned industrial property developer and planner JTC Corp, has also invested $9.25 million in FLUX Factory Inc, a San Francisco-based software firm focused on ecologically sound building design.
Surbana Jurong is described as among the largest pan-Asian consultancies for urbanisation and infrastructure developments. One of the deals involves its purchasing a 20 per cent stake in CITICC (Africa) Holdings, a $300-million platform established by the World Bank’s International Financial Company (IFC) and China’s CITIC Construction Co to develop affordable housing.
Recognising the global shift in growth towards emerging markets, Surbana Jurong states it is targeting to grow its annual fee-based revenue to S$1 billion-to-S$1.5 billion over the next three to five years. Currently, it generates about S$500 million. The investment in CITICC Africa represents an awareness of the market opportunity that the urbanisation of Africa creates.
The percentage of Africa’s population living in urban areas is projected to increase grow from 36 per cent in 2010 to 50 per cent by 2030.
As of 2012, The Economist noted that emerging economies – led by China and India – are undergoing rapid urbanisation, creating opportunities for firms to provide planning and building services for projects like business parks, residences and hospitals. As of 2015, 54 per cent of the world’s population lives in urban areas.
By 2050, 66 per cent of the world’s population will live in urban areas, with much of the growth in developing countries.
In an interaction with LSE Business Review, Nicholas Stern of the London School of Economics (LSE) said, “The world is undergoing fundamental structural change. The balance of economic activity is moving to emerging markets and developing countries, as they have faster growth rates than we’re seeing in the rich countries. It’s moving into towns and cities at an extraordinary rate.”
Stern added,. “Essentially we have about three and a half billion people in towns and cities now, 50 percent of the world’s population of a little over seven billion. And we’re going to move in the middle of the century to something like six and a half billion city dwellers, representing around 70 percent of a population of over nine billion.”
Continuing on this, Stern elaborated that urbanisation would require “…tremendous investment and design, and the form of that investment, the form of that design, will shape our cities, our energy use, our greenhouse gas emissions, our air pollution, for decades to come.”
Some challenges that could result from a lack of infrastructure capacity and planning for growing cities are a lack of food and water security, as well as a housing deficit.
Global infrastructure spending is projected to increase from an annual US$4 trillion in 2012 to more than US$9 trillion per year by 2025, according to consultancy PwC. Meanwhile, the Asia-Pacific (APAC) market will represent nearly 60 per cent of urban infrastructure spending by 2025.