23116_FOC Centralized Content_Demographer_Report_v3[55]

DEMOGRAPHERS

Baseline The world gets bigger every day. Or, it has done so since the 14th century, at least. In 1940, the world’s population was estimated to be approximately 2.4 billion. In 1980, the world’s population was 4.5 billion. Fast forward to 15th November 2022, and the global population passed the 8 billion mark. The global population currently grows by c.1.1% a year, equating to a net addition of a country the size of Germany every year. Global population growth can be attributed to technological and public health advancement, and the economic growth that has enabled this. However, the rate of change has slowed dramatically. It took just eleven years for the population to grow from 7 to 8 billion(2011-2022); however, it is likely to take us to the late 2030s (estimate 2037), until we hit 9 billion. This rate of growth is due to ongoing demographic transitions, and the impact of urbanization and social change on fertility (Randers). At a global level, growth is driven by natural change – put simply, the birth rate has far exceeded deaths. Since 2000, the global fertility rate was 2.7, at present it is on a downward trajectory at 2.3, with stable at 2.1.

CITY SHAPER DEMOGRAPHERS

1 Cushman & Wakefield | Future of Cities |

However, at a domestic level, natural change is not the only factor on population growth, one has to factor in the comparative attractiveness of the UK as a place to live where freedom of movement

Between 2000 and 2021, 60% of the contribution to population growth was a result of net migration. Even since the end of free movement between the UK and EU, net migration has increased to record levels.

allows. In the UK, immigration exceeding emigration has been the primary driver of population growth since the 1990s.

UK POPULATION

Population (million)

50 52 54 56 58 60 62 64 66 68 70

1978 1984 1990 1996 2002

2008

1954 1960 1966 1972

2020

2014

Source: ONS

UK NET MIGRATION

Net migration (thousand)

+800K +700K +600K +500K +400K +300K +200K +100K 0~ -100K

YE Dec 2018

YE Mar 2019

YE Jun 2019

YE Sep 2019

YE Dec 2019

YE Mar 2020

YE Jun 2020

YE Sep 2020

YE Dec 2020

YE Mar 2021

YE Jun 2021

YE Sep 2021

YE Dec 2021

YE Mar 2022

YE Jun 2022

YE Sep 2022

YE Dec 2022

British EU Non-EU

Source: ONS

CITY SHAPER DEMOGRAPHERS

2 Cushman & Wakefield | Future of Cities |

So, while the population of the UK ~67million has grown year-on-year since 1982, more recently we have seen falling birth rates start to drag on the growth rate. The Total Fertility rate is as low as it has ever been; however, this has been offset by an increasing age at death. Over the past 50 years, the reason that average age has been increasing has shifted from our ability to cure communicable diseases, towards the development of more effective later life extension. New innovations in this area present upside scenarios to population growth.

Taking both elements into account, the natural growth rate is positive at a rate of ~100,000 pa – albeit the impact of the pandemic saw 2020 saw the number of deaths exceed the number of births for the first time since 1976.

UK BIRTHS, DEATHS, AND NATURAL CHANGE, 1900 TO 2020

Births, Deaths

Natural Change

700K

1.2M

600K

1M

500K

800K

400K

300K

600K

200K

400K

100K

200K

0

-100K

0

1925

1905

1965

1985

2005

1945

Given modern building typologies, relatively low existing densities and constraints on how we use our land – and indeed the environmental impacts of new development - it is likely that population growth will be disproportionately absorbed through increased density, rather than urban extension.

In combination with positive net immigration, the population in the UK is growing at a broadly even rate of 0.4% pa. If this continues to 2040, then the population will be ~8% higher; an additional ~5.5 million people. For context, if this was to be directed in a single place it would be equivalent to a new city the size of Barcelona. Assuming a pro-rata dispersal across UK cities, then this would be equivalent of adding London’s two most populous boroughs (Barnet and Croydon) again to the population of London as it was at the end of 2020.

CITY SHAPER DEMOGRAPHERS

3 Cushman & Wakefield | Future of Cities |

What might change?

There are likely to be two weights which not only act as a drag on population growth, but further increase the age of the UK’s population

» Births – In 1974, the average age of a first-time mother was 26, in 2021 it was 31; with the average age of first-time fathers similarly increasing to 34. The Total Fertility rate has also decreased to its lowest ever – now estimated to be 1.55 children per woman, and the General Fertility rate down 54.1 births per 1,000 women.

» Changes to immigration rules - As a result of Brexit will limit the inward migration levels into the UK, and potentially have an upward pressure on emigration. The Government’s projections are of a long term net migration of +205,000, down from ~250,000 – even if we are currently a long way from those figures. Migrants tend to be younger and attracted to the UK for work or education.

These two elements will create an increased rate of ageing growth, and a slowing rate of population growth. It will also fundamentally alter the make-up of the UK’s population, and its ability to contribute to economic growth. Increased immigration will unlikely be the panacea that it once was, with global fertility rates decreasing, the universal talent pool will shrink.

POPULATION BY AGE

30%

84%

82%

25%

80%

20%

78%

76%

15%

74%

72%

10%

70%

5%

68%

66%

0%

1981

1987

1993

1999

2005

2011

2017

2023

2029

2035

Age 15-64 (lhs) Age 65+ (rhs)

Source: Moody’s

CITY SHAPER DEMOGRAPHERS

4 Cushman & Wakefield | Future of Cities |

Looking forward, absent of black swan events, (see Public Health below), the natural growth rate should continue over the assessment period albeit at a softened rate. After that, things become more uncertain, with commentators increasingly expecting a shift to negative growth, aligning with a number of advanced economies – and as a result of slowing growth globally. This could lead to a peak UK population of say 75m during the mid-2040s, reducing thereafter, which would have significant implications for our economy, innovation, society and demand for real estate. The UK will need to adapt its housing and funding of the increased ageing population. By the end of the assessment period, economic obsolescence and not population growth will likely be a bigger driver of development and regeneration. Takeaways » An easing and outlying potential for reversal of population growth over the subject period. » Ageing of population and an increase in the very old. » Immigration to continue to drive growth and demographic change in the short term even if there are reduced numbers. » Lower ratios of workers to pensioners will weigh on economic growth. » Economic obsolescence will overtake population growth as the driver of development. » Growth will impact density more than footprint of UK cities.

Black Swan Risks » Growth will impact density more than footprint of UK cities. » New pandemic / variant with high mortality. » Extreme event (Nuclear War / Asteroid Impact). » Antibiotic Failure. » Increased rise of infertility.

CITY SHAPER DEMOGRAPHERS

5 Cushman & Wakefield | Future of Cities |