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Fast facts
Source: CLSA Asia-Pacific Markets.
Indicators China India
Population (billions) 1.3 1.1
2006 GDP (US$ billions) 2,649.1 912.5
GDP per capita (US$) 2,015.0 811.6
10–year GDP growth
(1996–2006 percent)
123.8 55.5
5–year GDP Growth
(2003–2007 percent)
18.7 17.8
Fertility rate
(child per woman)
1.3 3.1
M arginal propensity to save 0.2 0.1
A comparison of China andIndia’s urban population
Source: The World Bank. * 2004 data.
1990 2005 1990 2005
Urban population
(percent of total population) 27 40 26 29
Urban agglomerations over 1 million
(percent of total population) 13 18 10 12
Population in the largest city
(percent of urban population) 3 3 6 6
Access to improved sanitation facilities
(percent of urban population) 64 69* 45 59*
Average annual growth of urban
population (1990–2005)
China India
3.6 2.5
Percent of urban population
Source: McKinsey Global Institute.
2005200019951990198519801975197019651960
45
40
35
30
25
20
15
10
percent Percent
China
India
Six out of the world’s top twentyagglomerations in 2007
Source: City Population.
Rank Agglomerations Country
Population
(millions)
5 Mumbai India 21.6
6 Delhi India 21.5
9 Shanghai China 17.5
12 Calcutta India 15.7
16 Guangzhou China 14.7
19 Beijing China 12.8
Rank
in
2025 City Country
2007
population
(millions)
2025
population
(millions)
Average
growth rate
(2007 –2025
percent)
2 M umbai India 18.2 26.4 1.8
3 Delhi India 15.0 22.5 1.9
8 Calcutta India 14.7 20.6 1.8
9 Shanghai China 14.5 19.4 1.4
Four out of top ten megacities of2025 are in China and India
Source: Forbes.
*
* Projected.
Six new megacities will emerge in China by 2025
Source: McKinsey Global Institute.
Number
of
cities
Percent
of
urban GDP
Number
of
cities
Percent
of
urban GDP
Mega (10 and over) 2 11 8 24
Big (5 to less than 10) 12 22 15 14
Midsized (1.5 to less than 5) 69 28 115 34
Small (0.5 to less than 1.5) 173 20 280 19
Big town (less than 0.5) 602 19 521 9
Total 858 100 939 100
2005 2025*
City type (Million)
* Projected.
• Beijing
• Shanghai
• Tianjin
• Shenzhen
• Wuhan
• Chongqing
• Chengdu
• Guangzhou
China’s eight megacities in 2025
Source: McKinsey Global Institute.
Source
(millions) 1990 2005 2025
Existing 254 254 572
New cities 0 50 27
Organic growth 0 47 47
City expansion 0 118 37
Migration 0 103 243
Total 254 572 926
Sources of urban populationincrease in China
Source: McKinsey Global Institute. * Projected.
*
0
20
40
60
80
100
2005 2025
China’s poor households willdecline by 2025
Sources: National Bureau of Statistics of China, McKinsey Global Institute.
Percent
Rich ( > $12,500 )
Middle class( $3,100 - $12,500 )
Poor ( < $3,100 )
0
20
40
60
80
100
2005 2025
Share of disposable income forChinese income groups
Sources: National Bureau of Statistics of China, McKinsey Global Institute.
Percent
Poor ( < $3,100 )
Middle class( $3,100 - $12,500 )
Rich ( > $12,500 )
0
20
40
60
80
100
2005 2025
Share of poor households inIndia will decline by 2025
Source: McKinsey Global Institute.
Percent
Rich ( > $21,890 )
Middle class( $4,380 - $21,890 )
Poor ( < $4,380 )
0
20
40
60
80
100
2005 2025
Share of disposable income forIndian income groups
Source: McKinsey Global Institute.
Percent
Rich ( > $21,890 )
Middle class( $4,380 - $21,890 )
Poor ( < $4,380 )
20302025202020152010200520001995199019851980
45
40
35
30
25
20
15
Age in years
Median age
Source: McKinsey Global Institute.
China
India
Inputs
2005 2020
Steel 35 41
Aluminium 24 41
Nickel 16 25
Copper 25 37
Oil 12 18
Cement 55 52
Coal 51 64
Iron ore 40 52
Percent
of world's
consumption
China and India’s consumptionof industrial inputs
Source: CLSA Asia-Pacific Markets.
*
* Projected.
Indicators
2005 2020 2005 2020
Capacity (GW) 516 1,687 127 326
Generation (Twh) 2,398 7,592 617 1,747
Capacity utilization (percent) 53 51 55 61
China India
Power generation by Chinaand India
Sources: CLSA Asia-Pacific Markets, CEIC, CEA, Ministry of Power.
**
* Projected.
India’s new housing demands 2005–2030
Source: Deutsche Bank Research.
Supply gap,
10.3%
Replacement,
20.6%
Population
growth,
27.8%
Smaller
households,
41.2%
Total: 4.7 million newunits per year
Four most expensive officemarkets of 2007
Source: CBRE Research.
Rank M arket Country
US$
per square
foot
2 M umbai India 189.5
8 New Delhi India 126.7
42 Shanghai (Pudong) China 58.6
49 Shanghai (Puxi) China 52.3
• Housing prices are too high and havecreated a bubble — 82%
• Cannot afford the price — 68%
• If they buy, they would become slaves totheir house — 23%
• Wishfully think the price will go down — 46%
Survey reveals concerns overhousing prices in China
Sources: HomesGoFast.com, The Social Survey Institute of China.
Three cities in top fifty fastest–growing rent markets of 2007
Rank Market Country
12 month
change
(percent)
3 Mumbai India 55
6 Bangalore India 49
12 New Delhi India 34
Source: CBRE Research.
* Ranked by 12 month percent change in local currency andmeasure.
*
Five of the ten densest cities in2007 were in China and India
Source: Forbes.
Rank City Country
2007
population
(millions)
Density
(person per
square km)
1 Mumbai India 18.2 29,650
2 Calcutta India 14.7 23,900
5 Shenzen China 8.0 17,150
8 Chennai India 6.0 14,350
10 Shanghai China 14.5 13,400
Two Indian cities rank amongworld’s dirtiest cities in 2007
Sources: Forbes, Mercer Human Resource Consulting.
Rank Agglomerations Country
7 Mumbai India
24 Delhi India
Pollution in Indian cities Residential areas, micrograms per cubic meter*
Source: Central Pollution Control Board, India.
* National Ambient Air Quality Standards are 60 forSO2 and NO2 and 140 for SPM.
City
2000 2005 2000 2005 2000 2005
Bangalore 24 9 56 44 218 138
Mumbai 8 7 34 19 260 223
Calcutta 15 11 33 40 295 270
Delhi 18 10 34 45 279 268
Hyderabad 11 6 19 22 174 113
Madras 7 7 15 11 113 121
Sulphur
dioxide
(SO 2)
Oxides
of nitrogen
(NO 2)
Suspended
particulate
matter
(SPM)
Pollution in Chinese cities Micrograms per cubic meter
Source: The World Bank.
City
Sulphur
dioxide
(SO 2)
Oxides
of nitrogen
(NO 2)
Suspended
particulate
matter
(SPM)
1995-2001 1995-2001 2004
Beijing 90 122 89
Guangzhou 57 136 63
Lanzhou 102 104 91
Shanghai 53 73 73
Percent of surveyed managersciting to business constraints
Source: The World Bank.
Indicators China India
Corruption 27.3 25.0
Courts 24.9 2.7
Crime 20.0 11.8
Procedures for business start-up
(percent of GNI per capita)9.3 73.7
Labor regulations 20.7 8.6
Labor skills 30.7 7.9
T ax rates 36.8 27.9
Policy uncertainty 32.9 9.2
Rigidity of employment index
(0=less rigid to 100=more rigid) 24.0 41.0
Sales of automobilesrising in India
Sources: Society of Indian Automobile Manufacturers, Government of India.
Year
Passenger
cars
(millions)
Two
wheelers
(millions)
Others
(millions)
Total
(millions)
Total
(percent of
2001
population)
2001-02 0.5 4.2 0.5 5.2 0.5
2002-03 0.5 4.8 0.6 5.9 0.6
2003-04 0.7 5.4 0.8 6.8 0.7
2004-05 0.8 6.2 0.9 7.9 0.8
2005-06 0.9 7.1 1.0 8.9 0.9
2006-07 1.1 7.9 1.2 10.1 1.0
Quality of life 2005
Source: The World Bank. * 2004 estimates. ** 2003 estimates.
Indicators China India
Access to improved water source
(percent of population) 77* 86*
Access to improved water source
(percent of urban population) 93 95
Access to improved sanitation facilities
(percent of urban population) 69* 59*
Carbon dioxide emission
(per capita metric tons) 3.2** 1.2**
HIV prevalence
(percent of ages 15-49) 0.1 0.9
Incidence of tuberculosis
(per 100,000 people) 100 168
• Estimated urban population by 2017 —
500 million
• Estimated urban slum population by 2017 —
69 million
• Estimated percentage of urban slumpopulation — 14%
India’s urban slum population 2017
Source: The World Bank.
China and India’s agriculture 2005
Sources: The World Bank, Government of India, Central Intelligence Agency.
Indicators China India
Arable land
(percent of land use)14.9 48.9
Arable land
(hectares per 100 people)8.0 14.8
Agricultural employment
(percent of total employment)44.7* 60*
* 2003 estimates
China and India’s transportationnetwork in 2005
Sources: The World Bank, Government of India.
Indicators China India
Rail line routes
(thousands-kilometers)62.2 63.5
Passengers carried
(billions-kilometers)583 576
Road network
(millions-kilometers)1.9 3.4
Paved roads
(percent of total roads)81.0 47.4
Urbanizing India and China
Case study: India
NationalCapitalRegion
India – some keystatistics
Urbanization in India
Need forinfrastructure
Need for realestate
Challenges andShortfalls
Solutions
India – some key statistics
GDP Achieving Critical Mass – RobustGrowth Rates
10-Year Real GDP CAGR:Regional Comparison
Source: Goldman Sachs,Sept 2007; EIU
Sourc
e: K
nig
ht F
rank India
Researc
h
GDP Composition
Services Sector Growing Rapidly
56%
31%
22%22%
52%
43%
26%22%
26%
0%
10%
20%
30%
40%
50%
60%
1990 2003 2005
Agriculture Services Industrial
Increasing contribution of theServices sector to the GDP
Manpower:
Relatively inexpensive qualified pool oftalent supply resource to industries–IT, Bio-Tech, Engineers, MedicalProfessionals, Accountants, etc.present in urban agglomerations
Dominant prevalence of Englishlanguage and British influenced legalsystem
Working Population
9.1%
5.1% 4.6%4.4% 4.4%
4.1% 4.1%
2.7% 2.7%
6.3%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Ch
ina
Ind
ia
Sin
gap
ore
Mala
ysia
Ko
rea
Taiw
an
Ph
ilip
pin
es
Ho
ng
Ind
on
esia
Th
ailan
d
India – some key statistics
Growth of Urban Middle Class
Rising income and consumptions levels
Higher capital expenditures, higher
investments
Favorable shift in income profile:
Shift of ‘aspirers’ to ‘seekers’ themost prominent aspect ofurbanization trend
Source: NCAER;
Mckinsey Global Institute
Household Classificationbased on Income (‘000)
India
Sourc
e: W
orld B
ank
Global Middle Class
Source: World bank research
Urbanization- 2007
Source: World Urbanization Prospects; HSBC Estimates
India – Urbanization in India
Estimated Slum Population by 2017: 69 million
Slum Population: About 41 million in 2001
Percentage of Urban Poor Residents: About 25%
Estimated Urban Population by 2017: 500 million
Urban Population: 25% of 850 million in 1992;28% of 1,030 million in 2002.
Large Cities: 23 in 1991; 40 in 2001
3 out of world's 21 mega cities: Mumbai; Delhi;Kolkata
Most Urbanized States: Tamil Nadu 43.9%;Maharashtra 42.4%; Gujarat 37.4%
Fast Facts:
So
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e:
Ce
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us
of
Ind
ia t
ill
20
01
; T
ho
ma
sB
rin
ko
ff:
Cit
y P
op
ula
tio
n f
or
20
05
Indian urban population was29% in 2007 and is expectedto reach 34% by 2020
Source: World bank research
Urbanization - not a side effect of economic growth; an integral part of the process.
India’s urban areas make a major contribution to the country’s economy.
Less than 1/3 of India’s people live in cities and towns.
Generating over 2/3 of the country’s GDP and account for 90% of government
revenues.
Cities expanding rapidly as increasing numbers migrate in search of economic
opportunity/growth.
Slums account for 1/4 of all urban housing.
Growth in urban population iscreating huge demand for urbanhousing and infrastructure
India – Urbanization in India
CentralGovernment
Planning
State and City Municipalities
Private Initiative
Age
ncie
s re
spon
sibl
e in
sha
ping
Indi
a’s
Urb
an L
ands
cape
Public Private
Partnership
(PPP)
Private Only
Public-PrivateResponsibilities
Government Only
Source: World bank research
High requirement for investments across economic sectors(Infrastructure/Real Estate/Financial Services/Consumer Goods) –to achieve at par status with other emerging market economies –still a distance from developed economies
Planning Commission of India May'07 - Indian Infra fundingrequirement (during 2007-12) - approx $320 bn. (INR/USD = 45.3)
320Total
55Residual*
11Ports
9Aviation
49Highways
66Railways
130Power
USD BnSector
•Scope of Residual sector varies depending on what definition of infrastructure is adopted. A conservative definition of infra would
imply residual include telecom, SEZs, supporting urban infra, water and sanitation, state and rural roads, logistics, pipelines etc.
Scope for investments in Infrastructure supporting urbanization – India & China
India – Urbanization in India Need for infrastructure
Source: World bank research
*Completed
TM = ongoing
India – Urbanization in India Need for Infrastructure
The World Bank and the Urban Sector in India: 1973-1999
Source: World bank research
Increase in affordability
Source: HDFC
Growing cities,
Rising Income,
Higher Disposable Income (Hence affordability)
Reduced Age Profile - Average Buyer (Hence higher purchasing base)
Usab
le H
ou
sin
g S
tock &
No
. o
f H
ou
seh
old
s (
m)
Source: Merrill Lynch Research
`14.6
23.421.8
13.5
19.819.4
0
50
100
150
200
250
1961 1971 1981 1991 2001E 2005E
0
5
10
15
20
25
Housing Stock Households Shortfall
Shortage in housing stock supply
India – Urbanization in India Need for real estate – residential
property market demand factors
Population Growth: 2.7 million housing units/ p.a.Replacement demand: 2 million dwellings/ p.a.
Supply gap: 1 million dwellings required/ p.a. by 2030to clear current shortage of 20-30 million units.
Additional factor for incremental demand:
Smaller households– expected to
be around 3.7 to 4.7 persons/household by 2030, due to:
Sustained economic growthYounger home ownersFewer children
Additional 1.2 to 4 million dwellings/ p.a.required to address this incrementaldemand
Source: Census of India, UN Habitat
Approx 10 Million Units/Year
Source: Deutsche Bank Research
India – Urbanization in India Need for real estate – residential property
market demand
Jones Lang LaSalle estimates the office market inMumbai at a total of 33 million square feet.
About 12 million square feet of this is classified asClass A and Class B space - not half as large as theoffice market in Düsseldorf or Amsterdam
Source: Deutsche Bank Research
India – Urbanization in IndiaNeed for real estate – commercial property
market
Global Retail Development Index 2006 MarketAttractiveness – A.T. Kearney
Source: Trent Ltd.
Emerging Concepts:
Open-air retail markets withstandalone tenants, city-centertransit-oriented retail hubs, anddiscount mass-retail formatsrapidly emerging as supplementsto the malls oriented retailbusiness
India – Urbanization in India Need for real estate – retail market
Shortage of rooms is being filled by standalone hotels and a growingunorganized serviced apartments segment
Food & beverage space and meeting space are expected to becomeincreasingly important, particularly for full service hotels
There are approximately 102,000 roomsoperating in India
London: 103,350 rooms
Business travel forecasted togrow by CAGR of 11.6% through2015
Leisure travel forecasted to growby CAGR of 13.7% through 2015
India – Urbanization in India Need for real estate – hospitality market
Rising Trends in ARR and OR
Planning:
State Governments lacking a modern planning framework
Poor governance and controls
The multiplicity of local bodies obstructs efficient planning and land use
Rigid master plans and restrictive zoning regulations limit the land available for building,
constricting cities’ abilities to grow in accordance with changing needs.
Housing:
Building regulations that limit urban density - such as floor space indexes – reduce the
number of houses available, thereby pushing up property prices
Non uniform Zoning – South India FARs available upto 3, where as Haryana – 1,
Maharashtra – as low as 0.5 in some place
Outdated rent control regulations reduce the number of houses available on rent – a
critical option for the poor
Poor penetration of micro finance and mortgage finance limit the ability of low income
groups to buy or improve their homes
Policy, planning, and regulation deficiencies lead to a proliferation of slums
Weak finances of urban local bodies and service providers leave them unable to expand
the trunk infrastructure that housing developers need to develop new sites.
India – Urbanization in India Challenges and Shortfalls
Service delivery:
Most services are delivered by city governments with unclear lines of accountability
There is a strong bias towards adding physical infrastructure rather than providing financially and
environmentally sustainable services
Service providers are unable to recover operations and maintenance costs and depend on the government
for finance
Independent regulatory authorities that set tariffs, decide on subsidies, and enforcement of service quality
is generally absent.
Infrastructure:
All facets under pressure: Erratic water and power supply, woefully inadequate transportation systems,
low coverage road network, etc.
Most urban bodies do not generate the revenues needed to renew infrastructure, nor do they have the
creditworthiness to access capital markets for funds
Urban transport planning needs to be more holistic – there is a focus on moving vehicles rather than
meeting the needs of the large numbers of people who walk or ride bicycles in India’s towns and cities.
Environment:
The deteriorating urban environment is taking a toll on people’s health and productivity and diminishing
their quality of life.
India – Urbanization in India Challenges and Shortfalls
Effective central and state government planning and policy:
Integrated Master Plan: Fresh look at practical levels of zoning
Reduce bureaucracy - single window - fast track clearance for projects
Invite private capital to participate – encourage PPP: revenue
sharing based models
Ahead of time focus on infrastructure development – minimum
20 year (horizon) planning models
Use of new and innovative technologies – enhancing efficiencies
Emulate existing successful models from developed nations
Subsidize through tax breaks for essential infrastructure investmentprojects
Create consciousness and initiatives for green projects (environmentfriendly)
India – Urbanization in India Solutions
Growing Cities -- China’s GDP Machines
“GDP is Number One”
• China’s real GDP grew by11.5% in 2007, contributingabout one-third of total globaleconomic growth
• Average Chinese annualincome grew from $293 in 1985to $2025 in 2006
• By 2020, 700 million Chineseexpected to join “consumerclass” (compared to 100 milliontoday
The most massive urbanizationin world history
• China’s urban population grewseven-fold from 1952 (72M) to2004 (540 M)
• Virtually all of China’spopulation growth in last 20years has been urban
• 300 million Chinese expectedto move into urban areas overnext 10 years
• 100 cities with population over3 million expected
• Urban population expected toexceed 1 billion by 2030
Urban - rural income inequalityleading to greater pressure tocreate urban jobs
• Urban incomes have grownfaster than rural incomes for10 consecutive years
• Urban per-capita disposableincome reached 13,786yuan ($1,907) in 2007,12.2% higher than 2006
• Rural per-capita disposableincome was 4,140 yuan($572.50 in 2007
Unfortunately, China’s hybrid ofurbanization and industrialization isproducing GDP growth at the expense ofindividual health and the environment.
• 16 of the world’s 20 mostpolluted cities are in China
• Urban growth patterns inmany Chinese cities arerepeating U.S. urban sprawlpatterns dependent on caruse and oil consumption
The auto industry -- a “pillar” ofChina’s economic growth
• 24 out of every 1000 Chinese owns a car today (compared to 300cars/1000 in Europe, 765/1000 in U.S.)
• 11,000 new cars hit the road
everyday in China
• On track to surpass U.S. as
world’s #1 auto market by 2010
• China has 20% of world population,
but owns 1.5% of the world’s cars;
U.S. has 5% of the world’s population,
and owns 25% of the world’s cars.
Beijing’s daily rush hour nowofficially 11 hours long
• 20% annual growth in number of
vehicles in Beijing
• Beijing’s road network grows by
only 3 – 4% annually
• Average driving speed on 11
main roads in Beijing estimated
at only 12 km/hr. (roughly same
as riding bicycle)
• Beijing transit use has declined
from 70% of the population using
transit in the 1970s to only 24%
in this decade
600 people die everyday in auto accidents in China(the leading cause of death for 15 - 45 age group)compared to 117 daily auto-related deaths in the U.S.
China’s rate of road accident deaths is double the worldaverage (5.1 deaths/10,000 vehicles in China compared to
2.0 deaths/10,000 vehicles worldwide).
China’s growing appetite for oil
• Self-sufficient for oil until 1993
• China’s oil imports grew from0 to 100 million tons in only 10years
• China now the world’s 2nd
largest consumer of oil and 3rd
largest oil importer
• One-third of China’s oildemand caused by cars (upfrom 10% ten years ago)
• Half of China’s oil importscome from Middle East,compared to 25% of U.S.imports
China expected to surpass U.S.as world’s top emitter ofgreenhouse gases this year
• China’s crop outputcould fall 5 - 10% by2030 if temperaturesrise
• Flooding in Yellow,Yangtze, and PearlRiver deltasanticipated due torising sea levels
“Host a ‘Green Olympics,’Build a ‘green’ homeland”
What kinds of cities will Chinachoose for its future?
