The world is becoming ever more city-centric. The share of the world’s population living in cities will reach 70% by the middle of the century. At the same time, the number of megacities with a population of more than 10 million people will climb from 33 to 50.

 

While the speed of the urbanisation trend seems to be constant, its regional dynamics are changing. Urbanisation will slow in most high- and middle-income countries, but it will accelerate in many low-income Asian and African countries.

 

As global growth engines, cities need proper infrastructure to be successful. Sizeable investments are required over the coming decades to make our cities fit for the future, targeting classical as well as digital infrastructure.

 

Global growth concerns and related expectations of more monetary easing have lifted concession companies but weighed on the materials sector. While valuations are somewhat elevated for the former and cheap for the latter, we still prefer the concession companies’ longer-term growth prospects. In addition, we believe some of the building technology and smart city technology companies are well positioned to benefit in the longer term.