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Tipping point was the title of the keynote presentation by John Forbes at the PwC annual European conference in Frankfurt in November 2012, the theme of which was developed further in a series of conference presentations, webinars and articles. We are at the tipping point. The years 2010 to 2015 are a pivotal point, not only for the real estate industry, but for our planet. The second half of 2012 and the first half of 2013 represents the fulcrum.
Firstly, we are at a tipping point in that shift of economic power from the developed to the developing world. According to the IMF World Economic Outlook published in April of last year, developing economies are expected to have overtaken the advanced economies in share of world GDP from 2012 onwards. Emerging economies are set to grow much faster than those of the G7 for the next four decades. In only a decade, the share of world GDP of the advanced economies will have dropped from 55% to 45%. When charted over a 40 year period from 1992 to 2032, the impact is even more dramatic.
We are also at a tipping point in terms of the world’s middle classes, the people with spending power. In North America and Europe, the number of people regarded by statisticians as middle class is broadly static. The growth is in Asia and other emerging markets.
By 2015 the middle classes in Asia will equal those in Europe and the middle classes in the developing world will equal those in the advanced economies. The 5 years after that will see a dramatic growth in the middle classes in Asia.
When raised the question of Urbanisation at the PwC European real estate conference in 2007, the world was approaching a tipping point in urbanisation where for the first time in human history more people would live in towns and cities than in the countryside. According to the United Nations population statistics, the proportion of the world’s population living in towns and cities reached 50% in 2010. In 1950 it was 29% and by 2050 it will be 69%. The world has therefore passed a landmark point where the majority of its population is now urban.
We are at a tipping point for aging population. According to the latest United Nations population statistics, the median age for the advanced economies has just passed 40. For the first time there are now more people in the developed world over 40 than under 4o. The developing world is aging too, but will remain materially more youthful than the developed world throughout our lifetimes. The process of aging in the developing world is bringing more people into the workforce rather than out of it.