Hype and reality, as we regularly note, are two very different things. Almost every Mayor or town planner will probably now describe the city with which they are involved as being ‘smart’ but the term has become sufficiently over-used in our view for it to have become almost meaningless. We were therefore pleased to encounter a recent piece of work which seeks to rank cities systematically on their smartness.
The analysis assesses three factors when considering how smart a city might be: tech infrastructure and connectivity, green infrastructure and a tech-driven job market. Within the former category, the number of Wi-Fi hotspots, broadband download speeds, 5G network presence, airport availability, and IoT companies are the criteria of importance. As far as green infrastructure is concerned, the number of public-access electric vehicle charging points and the amount of certified green buildings matter. The last of these factors is measured by both the absolute number of tech jobs and their ratio as a percentage of the population.
Your author derives a certain sense of pride from the fact that London ranks as the smartest city in Europe. The city where he was born and has lived all his adult life ranks well for tech and connectivity infrastructure, with particularly high average broadband speeds. London’s green credentials are also strong. Despite these attractions, the city apparently has almost 50,000 tech job vacancies at present. Amsterdam and Berlin score well in Europe too, but US cities (with Austin, LA and Seattle at the top of the list) generally rank above their European counterparts.
All ranking methodologies will have their inevitable flaws, but we have argued since 2019 that cities globally will need to improve their infrastructure and become de facto smarter. Much of the driver for this is demographics: 1.3m people around the world are moving into cities each week, implying that by 2050, c70% of the world will live in urban locations (data from the UN). However, beyond better tech architecture and greener living conditions, we are of the opinion that foundational infrastructure matters too. Both water services and grid infrastructure drastically need to be improved, as we argued in respective theme pieces in February and September last year, creating a range of potential investment opportunities.
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
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Alex Gunz, Fund Manager
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