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UK’s built asset wealth fades as China takes global lead

The UK has dropped two places in a global survey of countries’ wealth in terms of their built assets – just as its favoured infrastructure business partner China takes the top position.

The Global Built Asset Wealth Index, created by Arcadis and the Centre for Economics and Business Research, calculates and ranks the value of the built environments of 32 countries across the globe.

With its built environment wealth now totalling £3.1trn, the UK has fallen two places to 13th position, behind all other G7 nations with the exception of Canada.

Meanwhile, China has overtaken the US to top the rankings following extremely high levels of infrastructure investment, with a built asset wealth of £30.8trn. The USA’s total is £23.8trn.

Built assets per capita (US$)

Source: Penn World Tables, IMF, World Bank WDI, National Statistical Agencies, CEBR Analysis

Since 2000, China has invested £21.3trn in its built assets – a total which exceeds all other economies combined. According to the report, the growth is evidence of China’s unprecedented level of investment in its infrastructure: around 9% of GDP, compared to just 2% in the US.

Greg Bradley, head of UK business advisory at Arcadis, commented: “As a mature economy, the UK relies too heavily on its existing infrastructure. This poses different challenges to those faced in emerging markets, where the emphasis is on building from scratch. New projects in the UK have to integrate with the infrastructure that is already in place and help deliver better value from it. This, in part, explains the UK’s placing on this year’s Index.

“However, the Crossrail Interchange work at Old Oak Common shows how an investable masterplan can bring together multiple stakeholders from the public and private sectors to unlock investment and deliver a project that integrates old and new to meet London’s future transport needs while delivering growth.

"But investment is crucial if the UK is to meet its wider infrastructural needs and deliver growth. The onus now is on the government to implement policy that will provide greater certainty on timing and sale for major programmes, allowing businesses to plan effectively and, vitally, creating the right environment for investors to fund them."

Stock of built assets 2014 (US$)

Source: Penn World Tables, IMF, World Bank WDI, National Statistical Agencies, CEBR Analysis

The Arcadis/CEBR index also demonstrates a strong correlation between an economy’s stock of built assets and its GDP, suggesting that a decline in the value of the UK’s built assets could therefore have caused a knock-on effect to UK GDP.

It therefore argues that substantial infrastructure investment in the next five years will be key, not only to strengthening the value of the UK’s built environment, but unlocking potential GDP growth.

The Global Built Asset Wealth Index has revealed several other “movers and shakers” in the built asset stakes as wealth begins to shift tangibly towards emerging economies:

At 31st place overall, Qatar tops this year’s index as the richest built asset owners per capita, with a built environment now worth almost £130,000 per person following a 677% expansion since 2000.

Malaysia is in 22nd place, benefiting from significant public infrastructure investment, with the total road network growing by 68% (an additional 93,000km) in the past five years.

Saudi Arabia, placed 17th, has achieved huge progress in recent years, recording a 200% growth rate between 2010 and 2014. Large-scale investments include a strategy to build 500,000 homes within five years, and a programme to build 10,000 schools in 10 years.