Middle Eastern cities are poised to set the standard as future global hubs, with greener economies, supply chain diversification, healthcare investment, technology and measures to address inequality expected to receive priority after Covid-19, an HSBC report said.
The report, which was released yesterday, called on cities such as Abu Dhabi, Dubai, Cairo, Riyadh and Istanbul to focus on remote working, distance learning, telemedicine, e-commerce and online media content.
It stressed the need for governments and business leaders to support the transition towards diversified, more digitised, cleaner and greener cities.
“Their next chapter of growth will depend on how effectively they can work together as a network and on the individual ability of their economies to drive climate and sustainability-oriented innovation, reinvented trade flows and the pursuit of human health and happiness,” said Greg Clark, HSBC's global head of future cities and new industries and author of the report.
The pandemic is the worst crisis to hit the global economy since the Great Depression and it has halted international trade, grounded flights and forced companies to furlough or lay off staff to cut costs.
The report said Covid-19 is expected to have several socio-economic implications in the long term that could reshape consumption, value creation and interaction.
It also said the lockdowns had highlighted the need to reform trade relationships and create more resilient supply chains.
“The current debate suggests global cities could see near or re-localisation of production facilities for priority industries and increasing use of digital supply networks and AI to ensure maximum supply chain resilience,” the report said.
Cities around the world are poised to prioritise the domestic production and development of health supply chains for vaccines, medicines, personal protective equipment, food and beverages.
It is expected that local production will be focused on the sectors in which the cities already have specialist skills and industrial capacity.
Mubadala Investment Company, Abu Dhabi’s strategic investment arm, joined hands with industrial company Honeywell in May to produce N95 face masks as part of its drive to nurture the UAE’s manufacturing base and curb the spread of the pandemic.
The plant produces about 90,000 masks a day and has an annual capacity of more than 30 million masks.
The pandemic has hastened the digital transformation of cities around the world through services such as telemedicine, distant learning and remote working.
“As we adjust to the new normal, the longevity of these trends could have huge implications for [property], mobility and spatial flows between city centres and city fringes,” the report said.
The crisis has also highlighted the importance of happiness and well-being and has boosted support for health, climate and biodiversity policies.
This has sparked demands for more public health spending, including improvements to basic insurance coverage and medical infrastructure, as well measures to ensure that the capacity of hospitals can be easily increased should the need arise, the report said.
“We are likely also to observe the rapid development of remote health care, including the increasing use of telemedicine and adoption of digital and remote healthcare technology” such as tracking devices, monitoring apps and wearable consumer healthcare devices, HSBC said.
The pandemic has also broadened public support for a future that is environmentally responsible.
“There is more pressure than ever before for governments to produce de-carbonising, low-emission tech pathways by investing in green energy, power efficiency and optimised storage," the report said.
"There is optimism that cities around the world could adopt and adjust to some of these ‘better’ behaviours for the long-term.”
The health crisis is also forcing cities to rethink the management of public spaces and address the social, economic and racial inequalities that have been magnified, according to the survey.
As sectors reopen, bringing new ideas and business models, this “new normal” will produce a new set of business and investment opportunities across numerous sectors and locations, HSBC said.
The Middle Eastern cities highlighted in the report are expected to take the lead in this transformation, the report said.
“Their next cycle has the potential to see them become global centres for reinvented flows of trade, more resilient supply chains and revised business models led by digital transformation, which dovetails with HSBC’s priorities in supporting our clients and communities to build back better across the region,” said Daniel Howlett, HSBC's regional head of commercial banking in the Middle East, North Africa and Turkey.
The HSBC City Reports are part of a wider Future Cities campaign that the bank launched across the region, which also includes illustrating the report in street art that captures the elements of each city’s next cycle of development while paying tribute to its heritage.
