Prudential Financial : Thought Leader of the Week: Taimur Hyat

The pace at which people are moving into cities around the world brings one of the most profound global changes in generations and has created the need to find solutions to meet technological, demographic, consumer, food supply and real estate demands. The megatrend holds promise for opportunities across all asset classes, and a new white paper from Prudential Investment Management, "The Wealth of Cities," calls on institutional investors to begin paying attention and consider the implications for long-term investing.

The need for new or improved infrastructure around the world is just one of several critical needs emerging as more people move into cities since the Industrial Revolution, according to Taimur Hyat, chief strategy officer at Prudential Investment Management.

"As the pace of urbanization continues to ramp up, global infrastructure needs are projected to top $50 trillion through 2030, with heavy spending required in emerging and developed market cities," he says.

By 2030, the number of cities with at least 1 million inhabitants will grow to more than 600 worldwide from about 400 today, according to the World Bank. That rapid growth highlights that the "prime time" of urbanization is upon us. It also offers rich investment opportunities that coincide with the need for institutional investors to look beyond short-term gains as they seek new ways to build long-term strategies, according to the Prudential Investment Management white paper. The paper draws from expertise within Prudential's global investment businesses specializing in public and private fixed income, public equity and real estate to examine urbanization's impact across asset classes and provoke investors to consider long-term investing through a thematic lens.

Global infrastructure needs provide four main investment opportunities: wired cities, mega-city connectivity, anti-pollution, and replacing and improving existing assets. Hyat notes that investors will be able to access these opportunities through public-private partnerships, private equity or debt investments, real estate securities or publicly listed funds, among other investment vehicles.

"The investment opportunity set varies by region and, in large part, can be driven by the level of private sector involvement in infrastructure development," says Hyat. "For example, in emerging markets such as India, the opportunities are centered on investments in anti-pollution initiatives like water treatment or city-to-city connectivity projects to help transport the fast-growing population. In fact, India recently announced intentions for public-private partnerships to build 200 low-cost airports over the next 20 years. In developed markets like the U.S. and U.K., the infrastructure investment story is much more about the replacement and improvement of existing assets."

Interested in learning more? Read "The Wealth of Cities." Want to speak to Taimur or other Prudential experts about infrastructure or urbanization? Contact Theresa Miller.