Built assets generated a total income of US$27.1trillion in GDP in 2013, according to a new study published today by ARCADIS, the leading global natural and built asset design and consultancy firm.
Developed in conjunction with Cebr, the Global Built Asset Performance Index examines the income generated by buildings, infrastructure and other fixed assets across 30 countries that collectively represent 82 per cent of global GDP. Key findings include:
- 40 per cent of global GDP generated from built assets including buildings and infrastructure across 30 countries
- In emerging economies, this increased to 45 per cent of GDP, whereas in advanced economies it fell to 36 per cent
- Mexico and Turkey generated the highest proportion of income from their built assets, at over 60 per cent of GDP
- Russia is the least reliant on built assets for generating GDP; just 14 per cent of Russia’s economic output is attributed to its built assets
- Chinese built assets generated US$6.9 trillion in 2013 – 53% of GDP – this is forecast to rise to US$7.4 trillion in 2014
- Singapore has the highest built asset income per person, at US$29,500 per capita.
The report found that, on average, 40 per cent of global GDP is generated from built assets, but this proportion fluctuates depending on the maturity of the economy. In emerging economies, which tend to be more reliant on industrial production, GDP from built assets rose to 45 per cent. The most reliant countries were Mexico and Turkey where built assets income accounted for over 60 per cent of their GDP.
Advanced economies, on the other hand, tended to be less reliant, with built assets accounting for, on average, 36 per cent of GDP. Russia was found to be the least reliant on built assets at just 14 per cent. The remaining GDP can be attributed to wages, income from intangible assets and from natural resources rents.
David Sparrow, Global Director, Multinational Client Program at ARCADIS said: “Built assets such as good transport links, productive industrial centres and high quality residential and commercial property all positively contribute to the economic performance of a country. For the first time, our report paints a full picture for the economic performance of this stock and assesses how effectively different economies make use of the built assets they have at their disposal.”
Overall, China generated the highest returns from its built assets at US$6.9 trillion in 2013. This is forecast to rise to US$7.4 trillion in 2014. Despite being the world’s largest economy, US built assets generated far less income at US$5.5trillion, although still well ahead of India and Japan in third and fourth place respectively.
Top ten countries by overall built asset income (US$, PPP measure)
1. China – $6.9tn
2. USA – $5.5tn
3. India – $2tn
4. Japan – $1.9tn
5. Germany – $1tn
6. Mexico – $990bn
7. France – $818bn
8. UK – $693bn
9. Brazil – $633bn
10. Turkey – $622bn
Selected others:
12. Indonesia – $595bn
17. Russia – $347bn
28. Saudi Arabia – $106bn
Measuring built asset income per person
Across all the countries analysed in the Global Built Asset Performance Index, advanced economies’ built assets generated US$14,500 per person in 2013. The Singapore economy generates far more income from its built asset wealth than the average economy and saw returns per head estimated at US$29,500 in 2013. This is compared to an average of US$4,000 per person in emerging economies such as Malaysia, where built asset income per person was estimated at US$5,100.
UK and Europe lag behind
The Eurozone countries have some of the highest built asset wealth per capita, but returns are relatively low due in part to a higher proportion of income from services and other intangible sources also due to recent economic stagnation and overcapacity problems. When compared to some of its peers, the UK has lower levels of built asset wealth per capita, but does manage to extract a better than average economic return from its built assets relative to the value of the built asset stock.
Performance growth – the economies to watch
The fastest growth in built asset performance over the next decade is expected in China, Indonesia and Saudi Arabia. China’s built asset income is expected to increase dramatically by 77 per cent up to US$12 trillion by 2022. Similarly, income in Indonesia and Saudi Arabia is set to rise by 65 per cent and 70 per cent respectively. On the whole, built asset performance growth is expected to be greatest in lower income economies, as the process of economic catch up continues over the coming decade. Advanced economies are expected to see built asset returns increase by, on average, 21 per cent, compared to 66 per cent growth expected in emerging markets.
Simon Rawlinson, Head of Strategic Research and Insight at ARCADIS said: “From our research we can see that countries face many different challenges in order to maximise the performance of their built assets. While some countries are proactively managing their built asset wealth to put them in pole position to reap the economic returns over the coming decade, others are in danger of failing to invest in their aging built asset base leading to a slow decline in their economic power. Sustaining a built asset base that protects the environment, enables people to thrive and creates economic value is possible but a clear long-term vision to deliver this infrastructure is absolutely essential.”
The full report can be accessed via this portal on the ARCADIS website.
Notes:
- The $27.1 trillion figure is based on the collective built asset income of the following thirty countries: Australia; Brazil; Canada; Chile; China; Egypt; France; Germany; Hong Kong; India; Indonesia; Italy; Japan; Malaysia; Mexico; Netherlands; Philippines; Poland; Qatar; Russia; Saudi Arabia; Singapore; South Africa; South Korea; Spain; Thailand; Turkey; UAE; UK; and USA.
- For the purposes of this research, ‘built assets’ are defined as including all the tangible fixed capital investment counted in the national accounting framework used by national statistical offices. This includes: infrastructure investment; residential and non-residential construction; investments in plant and machinery; and improvements in natural assets such as land reclamation.
- In order to compare the relative value of assets appraised in different currencies, a Purchasing Power Parity (PPP) measure is used to account for the sometimes significant variation between price levels across countries and to correct for currency fluctuations.
About ARCADIS
ARCADIS is the leading global natural and built asset design and consultancy firm working in partnership with our clients to deliver exceptional and sustainable outcomes through the application of design, consultancy, engineering, project and management services. ARCADIS differentiates through its talented and passionate people and its unique combination of capabilities covering the whole asset life cycle, its deep market sector insights and its ability to integrate health & safety and sustainability into the design and delivery of solutions across the globe. We are 22,000 people that generate €2.5 billion in revenues. We support UN-Habitat with knowledge and expertise to improve the quality of life in rapidly growing cities around the world. Please visit: www.arcadis.com