By 2050, India will overtake the United States and China to become the world’s largest economy, according to the 2012 Wealth Report produced by Citi Private Bank and Knight Frank, an international property consultancy. The report forecasts China as taking over the U.S. by 2020.
Going only by GDP growth, nine of the top 10 cities in the world are in China. The top 20 are all in China or India. But Indian cities are still not the most important cities to the world’s wealthy, which are led by London, New York, Hong Kong, Paris and Singapore. In ten years, however, Hong Kong and Paris will give way to Beijing and Shanghai, which are presently the fastest growing in importance for high-net-worth individual.
There are now 63,000 people worldwide with $100m or more in assets, according to Ledbury Research. To invest in property, super-wealthy people look at economic and political clout, knowledge and influence as well as quality of life in the city. The report finds that the world’s wealthy have weathered the financial crisis better that the wider population especially in prime property markets. “Those markets considered ‘safe-haven’ locations continue to attract private investors looking for both prime residential and commercial property,” says Andrew Shirley, who edited the report.
“But for how long can London and New York retain these top spots? Beijing, Shanghai, Singapore and Hong Kong are hot on their heels…” said the report. There are now 18,000 centa-millionaires in the region covering South-East Asia, China and Japan. This is more than North America, which has 17,000, and Western Europe with 14,000.
By 2016, Ledbury Research expects that this region will have extended its lead, with 26,000 centa-millionaires, compared with 21,000 in North America and 15,000 in Western Europe.
Saskia Sassen, from Columbia University who coined the term “Global City,” makes the case that dominant cities will be replaced by multiple city networks. “It has become clear over the last few decades that our geopolitical future is not going to be determined by the ‘G2’ combination of the United States and China,” he writes. “It will instead run via 20 or so strategic urban networks.”
Look out for two Indian cities- Surat and Nagpur- by 2050, writes Jaana Remes, Senior Fellow at the McKinsey Global Institute, who underlines the importance of 400 emerging market “middleweights” – fast-growing cities with populations between 200,000 and 10 million. These cities are “global growth engines, reducing poverty, expanding the global middle class by millions of households, and creating new market opportunities for local and multinational companies.”
Overall, the report suggests economic power is rapidly shifting to the East. For instance, it pointed out, that in 2010 the US economy grew by just 1.8% and Europe by 1.6%. In contrast, Asia managed to chalk up economic growth of 7.9%, which was down on the 9.5% achieved in 2009.
The report forecasts that the North American and Western European share of world real GDP will fall from 41% in 2010 to just 18% in 2050. Developing Asia’s share is expected to rise from 27% to 49% in 2050.
In the next couple of decades, experts also expect growth to emanate from unexpected quarters like Bangladesh, Egypt, Indonesia, Iraq, Mongolia, Nigeria, Philippines, Sri Lanka and Vietnam.
The report also finds that frustration over income-inequality is likely to be expressed through movements like the Occupy Wall Street demonstrations, which are likely to grow. “Governments may use more taxation instruments and globally there may be a further attack on tax havens,” says Willem Buiter, Citi’s Chief Economist. “Recent governmental and intergovernmental activity in these areas is not a passing phase. “It’s going to be a tougher playing field for the rich,” he adds.
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