Reimagining cities
for the urban billions

Urbanisation is one of the key social and economic trends of the 21st century. By 2050 more than 66 per cent of the world's population is expected to live in cities, an increase from 54 per cent currently.1 So how do we prepare for this future and create cities that are multi-faceted, sustainable and desirable places for people to live?

For cities to prosper, governments, developers, planners and the private sector must return their focus to the central feature of any thriving city: its people.

A return to human-centred city creation is vital in an era when globally mobile, technologically equipped and skilled populations are more readily able to relocate and choose where they invest their time.

Creating environments that have humanity and inspire a sense of connection between people should be at the heart of all future city building, says Macquarie Capital Executive Director Will Walker.

“Modern cities need to allow a populace to come together in ways that offer equal opportunity and engaging and fulfilling experiences," Walker says.

“It's about bringing back togetherness, community and a shared experience."

Cities that offer convenience, affordability and flexibility, while enhancing the wellbeing and enjoyment of residents, will be best placed to succeed as global populations exercise unprecedented choice about where they live.

Rising incomes and education levels, international travel, and a technologically connected world have made people more mobile, which means cities must be more competitive to attract highly skilled people.

1. World Urbanization Prospects (The 2014 Revision) - 2014 United Nations.

A return to human-centred spaces

As a defining feature of 21st century life, urbanisation has been associated with economic transformation, social and geographic mobility, the rise of the middle class in emerging economies throughout Asia and Africa, and other major shifts such as improved life expectancy and higher rates of education and literacy.

Much of the world's urban population growth is concentrated in developing economies, which are undergoing a shift from rural to urban communities that has already occurred in developed nations. In regions such as Europe and the US that are already heavily urbanised, urban population growth is slowing to 0.5 per cent per year.

However, there are exceptions. Australia, which is already highly urbanised, will continue to see urban population growth of 1.5 to 2 per cent per year, on par with developing cities.2

Urbanisation has been an engine for economic growth and poverty reduction, as well as entrepreneurship and innovation. By 2025 it is forecast that urban consumers will contribute an additional $US20 trillion to global spending.3

But the rapid pace of urbanisation has also fuelled challenges such as housing shortages and affordability issues, urban sprawl, environmental degradation, air pollution and congestion in cities with inadequate infrastructure.

Development in some cities has been focused on building places for work rather than creating places for engagement and interaction that can be easily accessed by all.

“I think in development we have forgotten about humanity," says Sir Stuart Lipton, CEO of real estate development business Lipton Rogers.

“We have to create uplifting environments where humanity can succeed."

Historically, cities were the focal point of the public realm and acted as a meeting place where people could conduct a number of activities such as work, leisure and cultural engagement.

Design and infrastructure that was multi-purpose and driven by a village green or town square approach led to the creation of some of the world's most celebrated spaces, such as Paris' Place des Vosges or New York's Times Square.

Arup Global Masterplanning and Urban Design Leader Malcolm Smith says while the paved squares of Europe's great historic cities appear physically simple, they offer a complexity of use for activities ranging from summer festivals, to watching a Champions League Football match, to hosting a political rally.

He sees a need to return to some of these historic principles that originally allowed cities to develop as “places of many places", which were inclusive, dynamic and allowed a process of interchange.

“Good urban realm and infrastructure can't just be developed for a single use," Smith says.

“Too often today people want to tell me what a particular place is. It's got to be many things. We have to be able to test the places we're making today for multiple uses because that is what gives them diversity and resilience and ensures they don't sit there empty waiting for a specific programmed use."

2. Urban World: Meeting the demographic challenge in cities - October 2016, McKinsey & Company.

3. Urban World: Cities and the rise of the consuming class – June 2012, McKinsey & Company.

Case Study: CHICAGO

WHAT: Millennium Park, Chicago, United States

PURPOSE: To regenerate an area once occupied by rail yards by creating a new space that celebrates Chicago through architecture, art and parks

OUTCOME: Millennium Park is a modern space that marks a beautiful return to civic principles of human-centred design. With its green spaces, sculptures, open theatre and architecture, it has become a space for many community activities, and a major tourist drawcard, and shows what can be achieved when cities think ambitiously about public realm.

Liveable, diverse and multi-faceted cities

Lifestyle, rather than simple career opportunity, is now a driving factor for people in choosing where to live. Millennials, in particular, highlight work-life balance as the most important factor, excluding salary, in deciding whether to accept a job.

Arup Global Cities Leader Jerome Frost OBE says cities that recognise this and are prepared to compete for human capital by providing the lifestyle people are seeking will stand out as the great cities of the 21st century.

“What's interesting is that increasingly people are looking for that intertwining of leisure, education, living and working," Frost says.

“When we start to consider the physical planning of cities, I think that's where you start to realise that to make a city diverse, open to opportunity and able to provide a lifestyle that is appealing, then the flexibility of the urban centre is the place to focus and where urban planners can really make a difference."

From a planning perspective, it means cities must integrate the functionality of key urban infrastructure – transport, housing, places of work, health and education services – with activities that enhance human experience such as sport and exercise, the arts, retail, cafes and restaurants, and connecting with nature.

“Great cities offer conditions that create serendipity, surprise, delight and align them with the ability to support a population at an economic level," says Despina Katsikakis, Head of Occupier Business Performance at Cushman & Wakefield.

Katsikakis says the places that have the most positive impact on people are those that offer convenience, permeability and accessibility and “embrace the blurring of work-life functions – working, living, learning, playing – within a great public realm".

"Cities that are prepared to compete for human capital by providing the lifestyle people are seeking will stand out as the great cities of the 21st century."

Jerome Frost OBE - Arup Global Cities Leader

Case Study: LONDON

WHAT: King’s Cross St. Pancras Station, London, United Kingdom

PURPOSE: A redevelopment of 67 acres around one of London’s most iconic transport hubs. It took a once industrial area and regenerated it as a space for housing, leisure, education and activity with a mix of new buildings and refurbished historic architecture.

OUTCOME: Extensive consultation with the local community and stakeholders has transformed Kings Cross into a first-class example of multi-faceted city development offering a mix of public spaces, housing, parks, education facilities, restaurants, retail, art and other amenities.

A coordinated approach to creating great cities

Creating such spaces is not just a job of design, architecture and construction, but also one of management. Great cities are always evolving and require maintenance and curation to ensure they continue to meet the needs of their populations.
Places within cities should have built-in flexibility that allows them to be adapted or repurposed if the population requires it.

For this reason, Macquarie Capital Australia and New Zealand Co-Head, John Pickhaver says authorities have begun to recognise a need for a more holistic approach to planning, development, service provision and maintenance across all levels of government and in conjunction with the private sector.

“There is an increased role for coordination between government departments, planning and transport, housing, health and other services. Rather than operating in isolation, it's more important than ever for that planning function to be central to decisions about the urban environment as it continues to grow."

Rethinking densification

Some of the challenges that can arise when rapid urbanisation isn't managed properly include urban sprawl, constrained land resources, environmental degradation and pollution, and rising housing costs that create inequality in cities by imposing barriers to entry for those on average or low incomes.

As cities increase in size and number, Macquarie Capital's John Pickhaver says it is essential that economies establish plans to consolidate urban populations and become smarter in the ways they approach densification.

He says this means breaking the association densification has with overpopulation and cramped high-rise accommodation and reframing it as something more humane and positive.

“It can't be about building high rises so people can live in more dense environments. It has to be about creating communities where increased density is supported by services, transport and other infrastructure."

Arup Global Transport Leader, Isabel Dedring says the value of densification is that it can bring diverse groups of people together and create opportunities for interaction in multi-purpose places.

She says planning processes should start to reflect this human-centric approach by engaging with communities from the beginning and putting the outcomes people want at the heart of development, instead of designing first and seeking feedback later.

“The key starting point for successful new developments is: what does the community need, what does the community want?" Dedring says.

Projects that offer mixed-use housing, transport connections, social amenities, green spaces and environmental sustainability will allow for better management of densification, while at the same time boosting the happiness and wellbeing of city dwellers.

“Some of these ingredients are regarded as costly, when in fact they are a bargain if they motivate people that a place is worth coming to and it offers community and value," says Sir Stuart Lipton, CEO of real estate development business Lipton Rogers.

“If we were to talk about engagement, these are all things that make people feel relaxed and therefore more engaged and productive."

Creating multi-use and equitable neighbourhoods

Housing affordability is a challenge around the world, with concerns raised about whether cities can be equitable and enjoyable for all. Currently, Hong Kong, Sydney and Vancouver have the highest median housing prices out of the world's major cities and the World Health Organisation has identified housing conditions as a major factor in the health and wellbeing of urban populations.4

Arup Global Transport Leader Isabel Dedring says as urban populations grow, great cities will be those that develop new living environments that allow all people to engage with city life. Housing oriented developments that offer a mix of housing, work and leisure opportunities, alongside direct access to reliable public transport, can bring greater humanity to urban living.

She says planners are looking for “a more well-rounded integration of all income levels" when creating new high density living spaces. Housing schemes such as London's Elephant and Castle regeneration offer an example of how to improve the accessibility of cities by building a mix of prices, tenures and social housing into accommodation developments.

Chris Voyce, Macquarie Australia and New Zealand Co-Head of Infrastructure, Utilities and Renewables, says mixed use and mixed tenure approaches to high density housing not only create fairer and more interesting cities, they can also increase social mobility and educational aspiration by offering a more integrated and diverse environment.

4. 13th Annual Demographia International Housing Affordability Survey: 2017.

Rapid mass transit for more liveable cities

The World Bank highlights the mobility of people and goods as one of the greatest economic, environmental and social challenges of our time. By 2030, passenger traffic will surpass 80,000 billion passenger kilometres and freight volume will grow by 70 per cent globally.5

Transport oriented development is central to the success of densification. Mass transit has enormous potential to improve quality of life in cities by providing faster connections to economic and social opportunities and reducing the congestion and pollution associated with cars.

“Transport is absolutely critical when you have strong population growth," says Macquarie Group Chief Economist and Global Head of Macro Research, Ric Deverell.

“If all the projections are right and we're going to be creating bigger cities, then we need to plan for it and we need to inbuild the infrastructure now."

He says prioritising high-speed rail over bus and car travel brings a multitude of benefits to cities by bringing people together and creating ease of travel. Fast rail can ease housing affordability pressures in inner city suburbs by allowing people to live further away from the city centre and boost regional economies by connecting them to urban areas.

London, New York and Chongqing in China have made their urban centres more accessible by providing rapid rail connections that connect satellite regions to the city in 30 minutes. Population growth and housing affordability concerns in Sydney and Melbourne are putting increased pressure on both cities to do the same.

Tokyo's Shinjuku station, with its more than 200 entrances and retail and cultural precincts, is an example of the possibilities available when transport hubs are viewed as a part of the city experience, rather than mere points of arrival and departure.

Hong Kong has also made clever use of the airspace above its MTR metro hubs by constructing commercial, retail and housing infrastructure above the stations.

“People can live near the station and go shopping and socialise. It's a sensible approach and an example of good practice," Macquarie Capital Australia and New Zealand Co-Head John Pickhaver says.

5. Sustainable Mobility for the 21st Century - July 2017, The World Bank

Greener cities to promote health and wellbeing

The United Nations, through its Sustainable Development goals, and government agencies such as Australia's CSIRO have identified sustainability as one the key challenges of the 21st century and a primary goal that must be met for cities to be resilient to global environmental and health challenges and liveable as populations grow.

Cities are responsible for two-thirds of the world's energy consumption and an estimated 70 per cent of all greenhouse gas emissions.6 Air pollution is a major threat to the health and wellbeing of urban populations throughout Asia and Europe, in particular, and major cities such as Buenos Aires, Tokyo and New York will be among the areas most affected by climate change.7

At the same time, urban consumers have become savvy to the wellbeing benefits of cleaner and more active cities. Access to natural light, fresh air, green spaces, clean energy and pedestrian connections are growing priorities for city dwellers, says Macquarie Group Head of Workplace Design, Anthony Henry.

“Consumers have become much more sophisticated," Henry says. “People are now asking questions about the built environment and the urban environment that they never asked before. It means cities have a much higher standard to meet."

Cities that offer sustainable design, natural spaces, and prioritise clean air and energy will be best placed to foster wellbeing and create healthier communities, while at the same time driving down emissions that cause climate change.

The decline of the combustion engine is accelerating the transition to greener cities, as is growth in the global sharing economy, which encompasses ride and bike-share services. The UK and French governments plan to ban new petrol and diesel cars by 2040 and the number of electric cars sold worldwide hit a record 750,000 in 2016, according to the International Energy Agency.

A growing number of cities, including Vancouver in Canada, Aspen in the US, and Sydney and Canberra in Australia, are setting long-term targets to source 100 per cent of their energy from renewable sources, acknowledging they must play their part in reducing the environmental footprint of urban areas.

Macquarie Capital Executive Director, Will Walker, says cities can become more appealing environments for their citizens by prioritising pedestrianisation, followed by mass transport.

“Public health should be about trying to get people active as much as possible and I think that should shape the urban landscape of modern cities as well," he says.

Indeed, Head of Occupier Business Performance at Cushman & Wakefield, Despina Katsikakis, says there is pressure on cities to become smarter and greener.

She says cities such as Sydney are leading the way in bringing physical activity and nature back to the urban realm.

“Being able to embed nature within the city is a really critical and challenging issue if we are to reconnect people with humanity in the centre of the city," she says.

6. Global Platform for Sustainable Cities, - November 2016, The World Bank

7. Hidden Cities: Unmasking and overcoming health inequities in urban settings - World Health Organization and United Nations Human Settlements Programme 2010

 

 

Case study: NEW YORK

WHAT: The High Line, New York, United States

PURPOSE: An obsolete elevated railway line and underutilised piece of infrastructure was repurposed into a 2.4-kilometre long public park.

OUTCOME: An important part of this industrial neighbourhood’s history was retained and transformed into a beautiful and community owned space which has also become a popular tourist destination in New York.

Funding frameworks

The biggest obstacle to creating more enjoyable and equitable cities is public enthusiasm for building and financing the kinds of infrastructure such modern cities demand.

The global infrastructure gap, which describes the difference between what is currently invested in infrastructure and what is required to keep pace with community needs, is $US1 trillion annually.8

In the years to 2030, it's estimated 3.8 per cent of global GDP, or $US3.3 trillion annually, needs to be invested in infrastructure – much of it in cities – with emerging economies accounting for 60 per cent of that need.9

Private capital has the potential to be an important source of funding for such projects. Following record fundraising over the past two years, global unlisted infrastructure funds currently hold in excess of $US160 billion of unallocated capital.10 To meet commitment period windows, many of these funds are actively seeking deployment opportunities, including in the Australian market.

Historically many cities have faced challenges when it comes to building political support for new infrastructure, such as transport. But governments are increasingly open to the benefits of infrastructure and are exploring new methods for funding big vision cities.

This evolution must continue if economies want to create places that people want to live in and reduce social and economic inequality.

Chris Voyce, Macquarie Australia and New Zealand Co-Head of Infrastructure, Utilities and Renewables, says cities are increasingly moving away from purely publicly funded infrastructure ventures to mixed private and public models.

One advantage this formula brings is that all layers of organisation within a city take a stake in its evolution.

There is also greater emphasis on infrastructure as a service, rather than as a physical asset. Private operators that run transport networks, for instance, must demonstrate they are providing more reliable connections as well as cost efficiency.

“What that means is that cities and consumers are not only getting better service, they're also saving money which can then be spent on other priorities," Voyce says.

Arup Global Cities Leader Jerome Frost OBE says in terms of creating more liveable cities, the public and private sectors are beginning to work together to achieve the same ends.

“It means that public space being open to all is recognised now as a facilitation of value around that public space," he says.

8. The Operations and Maintenance Imperative, The Global Infrastructure Gap, World Economic Forum

9. Bridging global infrastructure gaps, July 2016, McKinsey & Company

10. Prequin

A shared urban future

Creating cities that are liveable and accessible will be one of the most important pursuits of the 21st century.

Places that offer desirable and convenient living, while inspiring enjoyment and human connection, will bring out the best in their populations and emerge as the great cities of our era.

As urban populations grow, improving life for city dwellers is a task that economies must start addressing now by putting people at the heart of all city development.

With the public and private sectors showing increasing willingness to work together to improve the design and management of cities, there is hope for a future of multi-faceted urban spaces that bring communities together.

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