Australia has been ranked the 16th richest nation for built environment wealth, according to the latest Global Built Asset Wealth Index, with buildings and infrastructure worth an estimated US$3.3 trillion (AU$4.5 tr).
Built asset wealth of the 32 countries that collectively make up 87 per cent of global GDP was estimated at AU$300 tr, with China overtaking the US to gain first place, with assets worth AU$65.57 tr.
Australia has gone up two positions in the ranks since the last index in 2013, due in part to population growth and low interest rates supporting residential demand and building activity. The report said foreign investment was also aiding the residential boom, with inner-city high-rise apartment buildings attracting Asian investors.
Arcadis Australia Pacific managing director of buildings and urban development Anthony Venturini said Australia had invested heavily in the construction of built assets and their long-term maintenance.
“Built assets are the strongest foundations for economic and social success, and Australia is expected to see an increase in the next decade as the government prioritises road investment as a growth area… [and] future economic growth will be realised through further investment in the built environment,” he said.
Assessing the value of the built environment
But what is the true value of built assets? China’s huge investment in property development has seen it supersede the US as the number one nation for built environment wealth (now valued at AU$65.6 tr), but an increasing number of these properties – and even whole towns – are lying unused and empty due to uncontrolled development, lack of demand and a slowing economy.
“The health and wealth of a nation can be measured in many different ways and while factors such as GDP or employment have great value, a prosperous society is underpinned by a well-developed built environment that meets the needs of its people and economy,” Arcadis global leader of business advisory Julien Cayet said.
“China’s ranking this year marks a profound change in the global league table of the world’s wealthiest built asset nations. However, with so much uncertainty now on the horizon, even China and its fast-growth neighbours will need a renewed focus on quality over quantity.”
As a general trend, the index shows a shift of wealth to emerging economies, with the traditional economic superpowers – the G7 – showing a net decline in the value of their built assets since the 2013 report (despite an overall increase in global built asset wealth of AU$11 tr).
“Developed economies have experienced a long-term stagnation and decline of their built asset stock, as aging infrastructure falls into disrepair and investment fails to keep up. This revelation comes at the very time they may need to tighten the fiscal belts and do more with less,” Mr Cayet said.
“It is critical that each investment they make – be it new buildings and infrastructure, or upgrade and repair – considers the whole lifecycle of these assets to deliver the built environment that their society needs.”