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Viewpoint: Urbanisation Challenge

The urbanisation of the world is continuing at increasing pace, despite the challenging global economic environment.

Asim Gaba

Asim Gaba is a director at Arup

Today, we are witnessing an enormous economic transformation across the world as city populations in emerging markets rapidly expand and enjoy rising incomes - resulting in a game changing wave of new consumers with considerable spending power. Meeting the demands of these new consumers is fuelling a boom in infrastructure. Urbanisation and per capita GDP tend to move in close synchronisation as countries develop - what is diff erent about today’s wave of mass urbanisation is its unprecedented speed and scale, this is particularly so across the countries of the Middle East.

Urbanisation is increasing the pressure not just on city infrastructure but also on financial models to fund that infrastructure development. Much of the existing urbanisation in the Middle East has been funded by governments supported by oil and gas revenues. However, there is an increasing desire across the region for greater private involvement in both funding and implementation. Private funding requires a collaborative arrangement (private firms naturally want to safeguard their investment) with enlightened governments with vision, to enable those governments to retain appropriate control and influence within an effective regulatory framework.

This represents a great opportunity for private firms to add value:

■ Infrastructure firms whose core competencies align with the nature of the projects needed to create the cities of the future are in a unique position to contribute both commercial knowledge and technical expertise.

■ Private firms are in a strong position to collaborate with city and infrastructure authorities to establish regulatory frameworks. Such frameworks are typically immature in the Middle East but are vital to provide the essential structure necessary for the implementation of infrastructure projects and their funding.

■ The development of “smart” cities requires the holistic intelligent integration of infrastructure, technology, services and facilities for greater efficiency and sustainability. This stimulates the need for similarly flexible and bespoke financing packages. The independent and innovative approach of private corporations can provide the flexibility and adaptability needed to create the cities of the future.

■ Projects can benefit significantly from the superior risk management solutions prevalent in private firms. There are examples of high profile major infrastructure projects where this has improved delivery times and reduced cost overruns - particularly important in today’s climate of tightened liquidity. The challenges posed by rapidly increasing urbanisation should be viewed as enormous opportunities for private firms. The significant benefits of private involvement include: greater corporate collaboration; the ability to invoke bespoke innovative financing models; and the development of intelligent urban infrastructure for the “smart” cities of the future. When applied proactively to the challenges, this can and should reap significant rewards - if we are up for the challenge.

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