The UN estimates that 66% of the world’s population will live in urban areas by 2050, compared with 54% in 2014. Asia, despite its lower level of urbanisation, is home to 53% of the world’s urban population. In Asia, the largest urban growth will take place in India and China. By 2050, India is projected to add 404 million urban dwellers, while China will add 292 million.

Megacities are those with 10 million inhabitants or more. In 2014, there were 28 megacities worldwide, 16 of which were located in Asia. In contrast, small cities or urban settlements with fewer than 500,000 inhabitants are numerous and many are growing rapidly.

The World Bank reports that the largest urban area in the world is the Pearl River Delta in China, covering the cities of Hong Kong, Macau, Guangdong and Shenzhen. 

While cities around the world grow and evolve naturally into megacities, the difference for Asia is the faster pace of development. Entrepreneurs from all over are attracted to these Asian megacities due to both pro-urban policies and incentives as well as the greater market size potential and faster market growth. An example is that more healthcare and pharmaceutical manufacturers are ‘Asianising’ their R&D to tailor to the Asian market. Such inward FDI and export-led market entries into Asia have in turn created more higher paying jobs and increased household income growth. Rural to urban migration is permanent in Asia, where younger workers flock to and stay in megacities as their new adoptive homes.

Asian megacities are thus undergoing constant development and reinvention, with some building two to three central business districts in suburbs where the rezoning of former industrial or agricultural areas allows more commercial development. Bigger companies have also split their operations, keeping their client-facing and business-generating functions in CBDs while shifting the back-office operations to areas offering lower rents with more spaces.

As sustainable urbanisation is key to successful development, the challenge is for urban planners and providers of urban-related goods and services to keep sustainability and access up and costs down (yet environmentally friendly). Healthcare, education, public transport, housing, electricity, water and sanitation are the basics, and more public-private partnerships are expected to undertake such provisions.

Already in Asia, sustainability is showing signs of weakness: overcrowding, traffic jams, bursting public transport systems. The trend is for Asia’s tier two and three smaller cities to grow into megacities and for megacities to grow into behemoth metacities. These are exciting times in Asia indeed, with a positive long-term outlook despite short-term hiccups.

Lawrence Yeo is CEO of AsiaBIZ Strategy, a Singapore-based consultancy that provides Asia market research and investment/trade promotion services. Email: lawrence@asiabizstrategy.com