SmartCity: investing in our urban future

Around the world, smart cities are adapting to the demands of a swelling population by embracing sustainability and investing in new technologies. That's good news for the planet, the economy, and investors.  

SmartCity: investing in our urban future

The world is moving to cities

Today, more than half of the world’s population lives in cities. That proportion is sure to increase significantly over the coming years. According to the United Nations (UN), nearly three-quarters of the globe’s inhabitants will be working, living, and commuting in and around urban centers by 2050.1

The growth of urban populations is a global phenomenon

The urbanization challenge

As their populations swell, cities will have to find ways to reduce their environmental footprint and improve their residents’ quality of life. Among other things, they’ll need to cut the amounts of pollution and waste they generate and build healthcare and social facilities fit for the 21st century.

To their credit, policymakers worldwide are alert to these challenges; to build the smart cities of the future, a growing number are investing heavily in new technologies in areas such as energy efficiency, water recycling, health, crime reduction, transportation, and innovative residential and commercial real estate.

Giving such efforts added impetus is the UN’s 2030 Agenda, a development program endorsed by 193 countries. Among its 17 Sustainable Development Goals is a pledge to build “Sustainable Cities and Communities”—urban centers that are more inclusive, safe, resilient, and environmentally friendly.

A wealth of opportunities

As smart cities expand worldwide, investment opportunities are bound to emerge, particularly among the companies involved in the buildout. In fact, the rise of smart cities promises to create significant, long-term business opportunities for firms that specialize in various aspects of urban development.

Research shows that, while the world economy is expanding by just 3% a year, there is the potential for urbanization-related firms to increase their revenues by more than 15% per year.2

To capture the investment opportunities arising from this urban revolution, Pictet Asset Management has developed SmartCity, a new addition to our family of thematic equity strategies. In common with our entire thematic investing range, SmartCity will draw on our portfolio managers' specialist expertise and deep understanding of the structural forces transforming the globe. 

 

1 “68% of the world population projected to live in urban areas by 2050, says UN,” United Nations, May 2018. 2 “Smart Cities – Turning challenge into opportunity,” Arthur D. Little, 2016.