Lessons on megacity trends: Interview with Dr Parag Khanna

By Mia Kwok, UDIA NSW Media & Communications Manager


Despite our physical distance from our neighbours and colleagues at this time, our economic and geopolitical distance is still shrinking. We still rely on trade with our Asia- Pacific neighbours, we still share social networks and connect across the globe. Business knows no barriers. Dr Parag Khanna is an expert on global connectivity as Founder and Managing Partner of FutureMap, a data and scenario based strategic advisory firm. He has consulted on global trends, technological disruptions, market entry strategies and economic master planning to governments around the globe. He has been named one of the “75 Most Influential People of the 21st Century” by Esquire Magazine and was recently an adviser to the US National Intelligence Council’s Global Trends 2030 program. Khanna considers himself a citizen of the world. Shifting primarily between Singapore and New York, Khanna navigates the cities like a local but feels he has a different kind of relationship to a city than your everyday resident.

“I call every place home, but I don’t stay long enough to be a local… A true local has all their stakes [in a place]. I think of myself more as a stakeholder. I feel like a resident who belongs,” he said. Perhaps this is what gives Khanna his bird’s eye view of society; an ability to see the world as a tapestry of mass behaviour. Increasingly, this ability to understand and predict how people operate is falling under the remit of those who build our cities: the architects, planners and urban developers.

“I think that in most of the world, in most of the mega cities, [cities are] still organic and accidental. That’s why they’re so overcrowded, and unplanned,” said Khanna. Khanna shared his expertise with us on the key global trends which are impacting the way we create cities of the future.

Geopolitical boundaries are porous

The importance of geopolitical boundaries is shrinking as economies grow without regard to political borders. His greatest example is of cities near borders which have high volumes of trade and migration, such as the US-Mexico or US-Canada borders. Parag has captured this trans-political movement via satellite imagery. The web of light shows the intricate way we live and work; not bound by borders but sprawling organically from one city to the next.

“Where borders are meant to divide us, what you find is that human beings are voluntarily moving towards cities and not only any cities, but very often cities near borders,” said Khanna. “Those that can afford to do business across borders will prosper more.”

Unplanned cities are less equal

In Australia, like many countries, our cities draw huge amounts of rural migration as the attraction of jobs, wealth and a better lifestyle brings more people into urban centres. “The reason we have this inequality in our country is because of rapid urbanisation… cities don’t have the capacity to cope, and you have such bad stratification within them. We have to do a lot to build the capacity that’s essential to take care of all the people who simply want to be in these cities and won’t go away.”

Most cities, Khanna tells us, are organic and accidental. Without proper urban planning, these cities are causing major social stratification — further dividing the wealth gap. Particularly in the last decade, 50 per cent of the world has become urbanised. Without good planning policy, city infrastructure can rapidly become overwhelmed. “You’re a victim of your own success,” said Khanna. The divide between unplanned and planned cities can be all the difference to strong economic growth. The key, said Khanna, is having multiple growth engines and adequate connectivity between them.

Megacities as growth engines

“Every country has to think about distributing their growth. Why is America an economic superpower? It’s because it has not one, or two, or three… but 40 major urban metropolitan regions. A megacity, for Khanna’s purposes, is a conurbation of a primary city and second tier cities, like the Greater Bay Area in Southern China. Nationally, of course, we have growth centres in our state capitals but the concept of second tier cities is a relative measure. For NSW, this concept includes Newcastle in the north, Wollongong in the South and the Eastern, Central and Western cities in the Sydney metropolitan area: the polycentric city model which has been a critical part of Sydney’s growth strategy. If we want to be globally competitive and create strong economic growth we will need strong economic centres, and lots of them. “China has been doing the best job of distributing growth,” said Khanna. “Chinese growth began 40 years ago in coastal megacities, especially the Pearl River Delta. Now, what you have is growth spreading across the country. They explicitly plan to have 20-25 megacity clusters that are distributed drivers of growth.” Khanna’s newest book, The Future is Asian, dives further into the growing connectivity across all Asian countries giving rise to the Eastern cultural and economic systems.

Mobility as an economic multiplier

“When you have mobility – cheap, national mobility – you allow people to circulate efficiently and to build a better life…there’s macro infrastructure that has massive micro-economic benefit in terms of resilience,” Khanna said. Khanna believes that mobility leads to more affordability, less congestion and greater sustainability. He presents the notion that affordable housing, transportation mobility and sustainability are the three seminal priorities for city government. He goes on to elaborate on the huge economic benefits Europe, China and Japan have from cities connected by fast, cheap rail networks. “In the case of China, we have the financial crisis in 2008 and the shock of falling demand for exports in Southern China, and a contraction in the Western economy. A lot of people got on trains – they got cheap tickets and they got one way tickets,” Khanna tells us.The ability to travel easily and cheaply meant the same people could return when the economy recovered. That mobility acted as an economic multiplier.

But Australia, he argues, is different.

Like America, we have a greater reliance on airlines to move people while the demand for rail lies predominantly with freight given our mining economy. “You want to determine [mobility] with a long term vision in mind, taking into account climate variables, demographic patterns, where industry is located…it’s a very complex exercise,” he said.

Be a market maker

Khanna’s last point is perhaps a culmination of everything he has explained about cities so far. Cities aren’t successful when they’re a byproduct of whimsy or responding quickly to a need at the time. Financial viability, and indeed economic sustainability, operates in an ecosystem. We need to act strategically across the industry, as planners and developers and so on, to distribute the population more sensitively. To think big when it comes to our city.So often, we talk about Sydney in reference to our CBD, when really we should be thinking about the megacity from Newcastle to Wollongong and the Greater Western suburbs. Khanna shows how comparatively across USA, Europe and Asia, cities are increasingly blurring their boundaries. Even satellite imagery is telling, as cities span across borders.

A combination of rapid, cheap mobility and more enticing populous cities will grow our economic outlook for the better. The demand of youth culture, the impacts of global youth migration, are driving rapid change but seizing an opportunity like gentrification means years of planning. But the critical point Khanna makes is that the property industry can lead the way. “You see it in rich countries like Germany’s Berlin and you see it in poorer countries like in Bogota, Columbia. Neighbourhoods change and can be made cool and interesting and more populous.” Developers need to be market-makers: they need to know the broader social and economic landscape and bring about change through design and planning.

“The real estate industry shouldn’t be sitting on the sidelines,” he emphasised.

“Be a part of making that new market you know is necessary.”