China Overtakes US As Global Leader In Built Asset Wealth

China has overtaken the US as the world’s wealthiest country measured by the value of its built environment according to the latest Global Built Asset Wealth Index published by Arcadis, the leading Design & Consultancy firm for natural and built assets.

The index calculates the value of all the buildings and infrastructure contributing to economic productivity in 32 countries, which collectively make up 87% of global GDP.

For the first time, built asset wealth in the US no longer leads the world. With wealth of $36.8T, the US now trails China at $47.6T. The US built asset stock is largely unchanged in the past two years, while since 2000, China has invested $33T in its built assets, a total exceeding all other economies combined. The growth is evidence of China’s unprecedented level of investment in its infrastructure – 9% of GDP – which dwarfs global competitors like the US, which currently invests just 2% of GDP.

Tom Morgan, vice president, head of business advisory, North America at Arcadis explains:
“A prosperous society is underpinned by a well-developed built environment that meets the needs of its people and economy. Therefore, a strategically planned, highly developed and well maintained built environment is critical to the economic and social success of a nation.

“Developed economies have experienced a long-term stagnation and decline of their built asset stock, as aging infrastructure falls into disrepair and investment fails to keep up. This decline puts even more urgency on public owners to find creative ways to attract finance, make smarter decisions regarding the maintenance of existing assets and to maximize every dollar spent – the whole asset lifecycle must be considered to meet society’s needs.”

Morgan continues: “China’s ranking this year marks a profound change in the global league table of the world’s wealthiest built asset nations. However, with so much global uncertainty from financial imbalances, unprecedented currency volatility and crashing commodity prices, even China and its fast-growth neighbors will need a renewed focus on quality over quantity.”

Index points to important US trends
The Index notes that while the US built asset wealth embedded in real estate has demonstrated solid long-term growth, public infrastructure has not seen the consistent funding and policy needed to build investor confidence in such long term projects. In addition, the report notes that the US needs to find ways to maintain the integrity and service levels of its aging asset base for less money.

The shifting wealth to emerging economies
The Global Built Asset Wealth Index shows a dramatic shift of wealth to emerging economies, such as Indonesia and Thailand, with the traditional economic superpowers – the G7 – showing a net decline in the value of their built assets since the 2013 report. Structural assets depreciate at a rate of around 5% per year, meaning this level of investment is the minimum required to maintain the status quo, a figure equating to $1.4T in the US.

In Europe, the almost decade-long economic slowdown has also had the negative effect of holding back investment.

The top ten nations in the Arcadis Global Built Asset Wealth Index are:

Key statistics from the 2015 Global Built Asset Wealth Index:

• China has the largest built asset stock in the world with a total of $47.6T, overtaking the US total of $36.8T.
• China’s heavily investment-dependent growth model means that by 2025 its built asset stock will be worth over double that of the US, and will exceed in size those of the next four economies combined.
• The stock of built assets is closely correlated with a nation’s economic output. On average, countries analyzed have a built asset stock worth 2.9 times GDP.

Per capita leaders:

• The per capita leaders are all Asian economic centers, with Singapore ($191,500 per person) Hong Kong ($160,000), Japan ($143,500) and UAE ($140,500) making up the top five behind Qatar.
• When China’s vast built asset wealth is split across its 1.4B people, its per capita ranking, at just $34,000 per person, falls to 24th in the world, behind Chile ($48,000), Mexico ($47,500) and Thailand ($44,500).
• Qatar’s total built asset stock has grown 677% since 2000.

Decline seen in leading economies outside of China:

• Globally, the largest depreciation of built assets was Japan, which has lost $4.6T in built assets since 2000.
• All European advanced nations underinvested between 2012 and 2014 resulting in an overall decline in infrastructure. However, as a proportion of total built asset stock, Germany’s decline of 21% is the most substantial over this period.
• Other developed economies to have undergone significant net de-investment since 2000 include the Netherlands (-5%), the UK (-8.9%), France (-10.2%) and Russia (-18.7%), while the US stock has remained largely constant (-0.8%).

Overall Arcadis Built Asset Wealth Ranking and Forecast

The full report can be downloaded here www.arcadis.com/builtassetindex.

About the study
This research, conducted by the Centre for Economics and Business Research and based on over 20 independent global sources, calculates the value of the buildings and infrastructure in 32 countries, which collectively make up 87% of global GDP. Built asset wealth was broken down into construction (including infrastructure) and machinery and equipment and forecasts were made of stock increases and depreciation.

About Arcadis
Arcadis is the leading global Design & Consultancy firm for natural and built assets. Applying our deep market sector insights and collective design, consultancy, engineering, project and management services we work in partnership with our clients to deliver exceptional and sustainable outcomes throughout the lifecycle of their natural and built assets. We are 28,000 people active in over 70 countries that generate more than $3.5B in revenues. We support UN-Habitat with knowledge and expertise to improve the quality of life in rapidly growing cities around the world. For more information, visit www.arcadis.com.

About Centre for Economic and Business Research
Centre for Economics and Business Research (Cebr) is an independent consultancy with a reputation for sound business advice based on thorough and insightful research. Since 1992, Cebr has been at the forefront of business and public interest research. They provide analysis, forecasts and strategic advice to major multinational companies, financial institutions, government departments, agencies and trade bodies. For more information, visit www.cebr.com.