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Nuveen knows: Upcoming urbanites

A new generation is flocking to cities, driving major economic and social shifts

Bright city lights are shining on alternative investment opportunities as urbanization trends impact everything from agriculture to real estate to infrastructure

The story of the past century has been one of dramatic population shifts that coincide with relentless industrialization in many parts of the world. In this century, the pace of urbanization has retained its momentum as people migrate from rural to urban areas to seize greater economic opportunities and experience the dynamism of the world’s metropolises. According to the United Nations, more than half of the world’s population already lives in urban areas today, and the organization predicts that this percentage will rise to 68% by 2050.

Surging Cities

North America is among the world’s most urbanized – 82% of people in this region lived in urban areas in 2018.

United Nations
Agriculture: Farms and cities

How will our agricultural sector keep pace with the needs of a rising global middle class in urban areas? Future demand for food, especially protein, would appear to make agriculture a solid investment. Yet, this global drive to feed city dwellers can also add complexity to food production while straining natural resource systems. Urbanization means that formerly productive agricultural land must be converted to commercial and residential areas, putting more pressure on remaining arable land. In some regions, this results in water scarcity, erosion and other problems. Notably, in Brazil, the demand for arable land comes with the threat of deforestation (Nuveen recently formalized its Deforestation Policy to help forestall this consequence across our agricultural investments).

Infrastructure: Assets under increasing pressure 

Urban infrastructure is integral to a city’s growth and productivity, yet it is often taken for granted as it vies with other budget priorities for funding. In old cities, infrastructure is aging, while in new cities the demand for new construction is rising. What must be fixed? What must be built? How will the public and private sectors collaborate to fund the work that needs to be done? Even as we seek answers to these questions, the fundamental assumptions are in flux due to changing commuting patterns and explosive growth in shipping and delivery congestion as e-commerce moves into the mainstream.

Impact investing: The urban socioeconomic challenge

Cities with burgeoning populations often experience gradual gentrification of neighbourhoods to appeal to middle-class buyers. This process often is supported by investment capital that seeks lower-risk returns. This trend, however, has a consequence: substandard housing choices often are all that remain for lower-income and elderly citizens. One solution to the diminishing supply of affordable housing in urban areas is impact investing that’s aimed at preserving rent subsidies while refurbishing the housing stock to create livable communities.

Real estate: Tilt toward Asian Pacific cities 

By 2030, Asia Pacific, led by China and India, will account for nearly half of the world’s output, more than 50% of the world’s urban population growth and almost all of the top 50 global cities. Though the global growth is in Asia Pacific, not all of Asia Pacific is monolithic — there is a vast diversity in geography, culture and economics — positioning investors to achieve broad diversification and attractive risk adjusted returns.

We hope you find these perspectives useful as you review your business activities and strategies. We are long-term investors, which means that we are constantly looking toward the future. We believe that the ever-greater concentration of people into urban areas will have significant implications for long-term investments. This is why Nuveen is factoring in the urbanite surge as we strive to add alpha and reduce risk for our investment clients.

Download Nuveen Knows: Upcoming urbanites

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Index definitions

MSCI ACWI ESG Universal Index. The MSCI ACWI ESG Leaders Index is a capitalization weighted index that provides exposure to companies with high Environmental, Social and Governance (ESG) performance relative to their sector peers. MSCI ACWI ESG Leaders Index consists of large and mid cap companies across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries*. The Index is designed for investors seeking a broad, diversified sustainability benchmark with relatively low tracking error to the underlying equity market. The index is a member of the MSCI ESG Leaders Index series. Constituent selection is based on data from MSCI ESG Research. 

MSCI ACWI Index. The MSCI ACWI captures large and mid cap representation across 23 Developed Markets (DM) and 24 Emerging Markets (EM) countries*. With 2,489 constituents, the index covers approximately 85% of the global investable equity opportunity set. 

Risks and other important considerations 
This material is provided for informational or educational purposes only and does not constitute a solicitation of any securities in any jurisdiction in which such solicitation is unlawful or to any person to whom it is unlawful. Moreover, it neither constitutes an offer to enter into an investment agreement with the recipient of this document nor an invitation to respond to it by making an offer to enter into an investment agreement. 

This material may contain “forward-looking” information that is not purely historical in nature. Such information may include projections, forecasts, estimates of yields or returns, and proposed or expected portfolio composition. Moreover, certain historical performance information of other investment vehicles or composite accounts managed by Nuveen may be included in this material and such performance information is presented by way of example only. No representation is made that the performance presented will be achieved, or that every assumption made in achieving, calculating or presenting either the forward-looking information or the historical performance information herein has been considered or stated in preparing this material. Any changes to assumptions that may have been made in preparing this material could have a material impact on the investment returns that are presented herein by way of example.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by Nuveen to be reliable, and not necessarily all-inclusive and are not guaranteed as to accuracy. There is no guarantee that any forecasts made will come to pass. Company name is only for explanatory purposes and does not constitute as investment advice and is subject to change. Any investments named within this material may not necessarily be held in any funds/accounts managed by Nuveen. Reliance upon information in this material is at the sole discretion of the reader. Views of the author may not necessarily reflect the view s of Nuveen as a whole or any part thereof. 

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. Investment involves risk, including loss of principal. The value of investments and the income from them can fall as well as rise and is not guaranteed. Changes in the rates of exchange between currencies may cause the value of investments to fluctuate.

This information does not constitute investment research as defined under MiFID.

The value of investments and the income from them can fall as well as rise and is not guaranteed. Changes in the rates of exchange between currencies may cause the value of investments to fluctuate. Nuveen Real Estate is a real estate investment management holding company owned by Teachers Insurance and Annuity Association of America (TIAA). Nuveen Real Estate securities products distributed in North America are advised by UK regulated subsidiaries or Nuveen Alternative Advisors, LLC, a registered investment advisor and wholly owned subsidiary of TIAA, and distributed by Nuveen Securities, LLC, member FINRA.