Right now, there’s a great migration taking place…
All over Asia, people are leaving the country and moving into cities.
These six large countries in the region… China, India, Indonesia, Thailand, the Philippines and Vietnam, are expected to see some 300 million people move from rural areas to cities over the next decade.
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This has been a long-term trend throughout the world. But it’s never been this big – so many people within such a short period of time – anywhere.
What this means is that there’s about to be a huge demand for real estate in these cities… for decades to come.
Let me explain…
The booming Asian middle class
We’ve talked a lot about how China is seeing a massive middle-class boom. Back in 2000, just 4 percent of China’s urban population was considered middle class. By 2022, that figure will be a whopping 76 percent.
In short, there are expected to be 550 million middle-class people in China. That would make China’s middle class alone big enough to be the third-most populous country in the world.
And India’s not far behind…
According to the World Economic Forum, India’s middle class could be larger than China’s by 2027.
Think tank Brookings Institute suggests that by 2030, two-thirds of the global middle class will be living in Asia.
But, unlike their parents and grandparents, these new middle class people won’t be working in factories making cheap plastic products for the West. Booming countries in Asia are moving “up the value chain” from manufacturing to services. And that means more people will be working in offices in the service sector – in jobs like finance, entertainment and hospitality.
And this new middle class will be migrating to urban areas.
The great urban migration
Between 2014 and 2050, India and China are projected to add approximately 700 million people to their urban areas alone. In other words, the equivalent of two times the entire U.S. population will be moving into cities across India and China over the next three decades.
The chart below shows Asia’s population distribution in 2016 versus the expected distribution in 2030 compared to the distribution in North America.
The rural population in Asia is expected to decrease from more than half of the population to less than 45 percent. And 354 cities across Asia will have more than 1 million people… compared to just 275 in 2016. Meanwhile, North America will have just 59 cities with a population of more than 1 million… compared to 51 cities in 2016. And the number of “megacities” in Asia (defined as cities of more than 10 million people) will rise from 18 in 2016 to 24 in 2030… while that number will remain static in North America at just two.
As you can see in the following graph, by 2030, 69 percent of China’s population is expected to be urban… and 40 percent of India’s population will be urban too.
That mean China will have the highest number of urban dwellers as a proportion of the total population in Asia-Pacific, just ahead of Thailand at 64 percent and Indonesia at 63 percent.
Meanwhile, India will still be below the regional average of 54 percent… but remember, India the second-largest country in the world by population – it is home to over a billion people (and rising) so the numbers involved are still huge.
As a result, the demand for housing, offices, factories, shops and a wealth of public facilities, not to mention infrastructure of all types, will be truly staggering in scope.
About 104 billion square feet of housing will need to be built to meet the housing needs over the next 15 years. This is equivalent to building about 34 London’s.
And around 3.8 billion square feet of new office space will be needed. This is equivalent to building around 30 Hong Kong’s or 50 Singapore’s.
Similarly, billions of square feet will also be needed for retail space. Online shopping is a growing phenomenon in Asia – but the need for bricks and mortar retail is still massive in these markets.
That means demand for real estate in urban cities across Asia is set to skyrocket… along with prices.