Global built environment wealth tops $193 trillion, according to a new report from consultancy EC Harris, but the UK is lagging behind.

Conducted in conjunction with the Centre for Economic and Business Research, the Global Built Asset Wealth Index quantifies the accumulated wealth of 30 countries’ built assets – encompassing all the property and infrastructure that contributes to economic productivity – to present an alternative indicator of economic health and growth potential.

The Global Built Asset Wealth Index illustrates the differences between 30 countries which represent 82 per cent of global GDP.  The Index reveals that total built asset wealth within these countries stands at $193 trillion – the equivalent to almost three times the $68 trillion GDP of the same countries.  By 2022, built asset wealth is forecast to increase by 35 per cent to reach $261 trillion.

China is set to outpace the USA as the world’s wealthiest built asset nation by as early as 2014, according to the report, but the UK and Europe lag behind, with a subdued built asset growth of 2.7 per cent over the next decade predicted.

The report also shows that Singapore citizens have highest built asset wealth per person while the fastest growth over the next decade is expected in Middle East and Africa and Asian regions - 63 per cent growth is expected across both regions.

Developed nations must develop new sources of competitive advantage using existing asset base, the report says.

Simon Rawlinson, Head of Strategic Research and Insight at EC Harris, said:

“Indicators like GDP and unemployment, which are traditionally used to define a country’s performance, only tell one side of the story.  While GDP quantifies national income, our analysis of the total stock of built assets provides an indication of accumulated wealth and the resources which can be drawn upon to fuel future economic growth.”

The Index reveals that the USA is the world’s most asset rich nation, with total built asset wealth estimated at $39.7 trillion. This is forecast to increase to $47.2 trillion by 2022 – a rise of 19 per cent.  However, China is rapidly gaining ground on the USA and could overtake it by as early as 2014. By 2022, China is expected to have accumulated $75.7 trillion in built assets.

The UK, which placed 11^th in the Index, appears to lag behind its peers in terms of built asset investment, with wealth per person of $88,000 - some 29.2 per cent below the average level of developed economies.  This huge gap suggests the UK has significantly underinvested in built assets over many years.

In the report, ECHarris suggests that the UK asset base is being used more intensively and more cost effectively than in peer countries. In asset rich, cash poor nations like the UK, the effectiveness of built asset utilisation will be a key to future competitive advantage, the report argues.

In ten of the economies in the study - including Japan, France, Germany and the UK - the stock of built assets per person is estimated to have fallen in 2012 compared to the previous year, with the most severe decline of -2.1 per cent in Japan.  The potential for built assets to contribute to the economy and generate income for the populations of these regions is in decline.

Simon Rawlinson continued:

“These nations need to continue to invest in new and existing built assets to improve mobility, productivity and standard of living, but do not have the available finance to do so.  They need to make best use of their existing asset base to develop new sources of competitive advantage.”

Asia’s built asset stock of $84 trillion is expected to increase to $137.4 trillion by 2022 – a rise of 62.9 per cent.  Similarly, the stock of built assets across the Middle East and Africa is set to rise by 63% to $8.7 trillion by 2022.

Simon Rawlinson said:

“In a world where the balance of economic power is shifting, we see countries in the East with large cash reserves investing in their built environment at an unprecedented rate, whereas countries in the West have an ageing built environment, but little cash to update it.  This has far-reaching consequences for the balance of both economic and political power as emerging economies continue to bridge the gap in accumulated wealth.

“Our Global Built Asset Wealth Index provides an important indicator of the productive potential of economies across the world.  Those nations that make the most from investing, developing, operating and reinventing their built environments are the best placed to succeed in the changing world economy.

“Built assets are the literally the building blocks of an economy.  Through compiling this study, we can pinpoint the trends which will inform how countries plan, create, operate and redefine their built assets in a way that fosters economic and social growth, across sectors and geographies.”

See here for the full report