The UK and Europe lag behind other parts of the world and the situation is likely to get worse as a subdued growth of just 2.7% in built assets is predicted over the next decade at a time when emerging economies are investing heavily.
Developed nations must develop new sources of competitive advantage in using their existing asset base, warns EC Harris.
The report examines national wealth by quantifying the accumulated value of each country’s built assets – the property and infrastructure that can be drawn upon to fuel future growth.
The report highlights the productive potential of economies across the world and how the balance of economic power is shifting as emerging economies continue to bridge the gap in accumulated wealth. China could overtake the USA as the world’s wealthiest nation in terms of its infrastructure and property by as early as next year according to the new global built asset wealth index has produced by EC Harris in conjunction with the Centre for Economic & Business Research.
The index reveals that the USA is the world’s most asset-rich nation, with total built asset wealth estimated at US$39.7 trillion (£26 trillion). This is forecast to increase to $47.2tn by 2022 – a rise of 19%. However, China is rapidly gaining ground on the USA and could overtake it by as early as 2014. By 2022, China is expected to have accumulated US$75.7tn in built assets.
The UK is in 11th place in the rankings with a total of US$5.5tn and average wealth per person of US$88,000 - some 29.2% below the average level of developed economies. This huge gap suggests the UK has significantly underinvested in built assets over many years, according to the report.
Singapore has by far the wealthiest population, with an estimated built asset wealth of US$156,000 per person. India and China have less than US$40,000 built assets per person, while developed economies have structurally higher levels of built asset wealth, averaging US$125,000 per person.
The first Global Built Asset Wealth Index has been produced to provide an alternative indicator of economic health and prospects for growth. The index gives a fresh perspective on the current and future prosperity of 30 countries that represent 82% of global GDP. The study US$193tn (£126tn) total global built environment wealth within the 30 countries is equivalent to almost three times the US$68tn GDP of the same countries. By 2022, built asset wealth is forecast to increase by 35% to reach $261tn.
Simon Rawlinson, Head of Strategic Research and Insight at EC Harris, said: “Indicators like GDP and unemployment, which are traditionally used to define a country’s performance, only tell one side of the story. While GDP quantifies national income, our analysis of the total stock of built assets provides an indication of accumulated wealth and the resources which can be drawn upon to fuel future economic growth.”
Singapore citizens have highest built asset wealth per person.
The fastest growth over next decade is expected in the Middle East and Africa region as well as in Asia, with 63% growth expected across both areas.
The top ten nations on the EC Harris Global Built Asset Wealth Index are:
- USA - US$39.7tn
- China - US$35.4tn
- Japan - US$18.3tn
- India - US$11.8tn
- Germany - US$10.4tn
- France - US$7.8tn
- Italy - US$7.4tn
- South Korea - US$6tn
- Russia - US$5.9tn
- Spain - US$5.9tn
Other results include Brazil (US$4.8tn), UAE (US$1tn), Chile (US$0.7tn) and Qatar (0.3tn).
In 10 of the economies in the study - including Japan, France, Germany and the UK - the stock of built assets per person is estimated to have fallen in 2012 compared to the previous year, with the most severe decline of -2.1% in Japan. The potential for built assets to contribute to the economy and generate income for the populations of these regions is in decline, warns the report.
“These nations need to continue to invest in new and existing built assets to improve mobility, productivity and standard of living, but do not have the available finance to do so,” said Rawlinson. They need to make best use of their existing asset base to develop new sources of competitive advantage.”
He added: “Our Global Built Asset Wealth Index provides an important indicator of the productive potential of economies across the world. Those nations that make the most from investing, developing, operating and reinventing their built environments are the best placed to succeed in the changing world economy.
“Built assets are the literally the building blocks of an economy. Through compiling this study, we can pinpoint the trends which will inform how countries plan, create, operate and redefine their built assets in a way that fosters economic and social growth, across sectors and geographies.”