Building Tomorrow: How Future-Ready Communities Are Shaping Our World


January 13, 2025 | Energy Future & Transition

Building Tomorrow: How Future-Ready Communities Are Shaping Our World

Key Takeaways:

  • Economic and population growth, digitalisation, sustainability pressures, and external shocks will drive the main urban challenges over the next decade.

  • This report outlines how various cities are implementing successful solutions to these challenges.

  • Urban stakeholders must utilise external expertise to formulate and implement successful solutions.

  • With its global expertise and operations, Neos Advisory can provide tailored services to businesses, cities and governments.

Urban Challenges Will Intensify

City residents, businesses, and planners will face significant challenges in developing and maintaining thriving urban environments over the coming decade. While cities constantly encounter challenges, some become less pressing over time while new challenges emerge. For example, the perceived risk of violent crime in many cities has diminished over the past two decades, whereas concerns about cybersecurity, climate shocks, and pandemics have intensified. The main challenges cities will face over the coming decade are outlined below.

 

Current And Emerging Urban Challenges

Economic & Population growth

Economic and population growth will be the primary source of urban challenges over the next ten years. Cities are growing rapidly, placing pressure on infrastructure, housing, and public services. The UN forecasts that 2.2 billion additional people will live in cities by 2050, increasing the urbanisation rate to two-thirds from half currently.

Challenges will be particularly acute in cities with rapidly growing populations, typically in emerging economies in Africa, the Middle East and South and East Asia. These three regions will account for 80% of global urban population growth by 2035. Mumbai’s population is projected to grow by 50% by 2036, and India's urban land use will surpass that of Western Europe.

Surging demand for urban services will strain infrastructure capacity in cities. The UN projects the population of Lagos to increase by over 40% between 2024 and 2035, adding 8 million residents, equivalent to relocating the population of Chicago to Lagos. Specific problems created by the inadequate provision of urban transport, residential, commercial, and healthcare infrastructure include:

  • Transport Network Strain: The rise in car ownership and insufficient public transportation infrastructure contribute to traffic congestion. As more people rely on private vehicles, roads become overcrowded, leading to longer commutes and lost productivity. In New York City, drivers lost an average of 101 hours in traffic in 2023, which cost the city USD 9.1 billion annually, while London drivers lost 99 hours, costing GBP 3.8 billion, according to the NRIX 2023 Global Traffic Scorecard. If electric vehicle ownership is not encouraged and facilitated by a modern charging network, increased reliance on cars also contributes to higher carbon emissions, worsening air quality and environmental degradation.

  • Housing Availability: Many cities worldwide are grappling with a severe housing crisis, as rising property prices and rental costs make it increasingly difficult for a large segment of the population to afford adequate housing. This shortage of affordable housing disproportionately affects low-income communities, often forcing them to move to more remote areas or substandard housing, deepening social inequality. Gentrification is also a contributing factor, as urban redevelopment projects drive up housing costs, displacing long-time residents. This widening gap between the wealthy and low-income populations in urban centres exacerbates inequality and increases social tension and instability.

  • Urban sprawl: Cities often experience urban sprawl as urban populations grow. Expanding cities into greenfield areas can lead to significant environmental issues, such as ecosystem destruction, worsened air and water quality, and higher greenhouse gas emissions. Building on marginal land, like floodplains, also increases vulnerability to climate-related disasters. Sprawling urban areas are also more costly to manage, as infrastructure and public services must cover larger areas.

  • Outdated Infrastructure: Rapid urban population growth can strain existing infrastructure, often leading to maintenance backlogs as cities struggle to keep pace with increasing demands. Essential systems such as roads, public transportation, water supply, and sewage can become outdated as resources are diverted to expanding services rather than maintaining existing ones. The backlog in repairs and upgrades can lead to inefficiencies, higher costs, and greater vulnerability to failures or environmental disasters.

Digitalisation

The increased digitalisation of cities presents both opportunities and challenges for city management. On one hand, digital tools enable better data collection, real-time monitoring, and improved efficiency in services such as traffic management, energy distribution, and waste disposal. However, these advancements also create significant challenges.

  • Cybersecurity: Growing reliance on digital infrastructure makes cities more vulnerable to cyberattacks. As urban systems become interconnected, a breach in one area—such as energy grids or public transportation—could disrupt entire cities. This places immense pressure on governments to invest in cybersecurity and resilience measures. Recent examples causing financial losses, disruption and reputational damage to the victims include an attack on India’s Kudankulam Nuclear Power Plant by North Korean hackers in 2019, London’s Hackney Council’s Ransomware Attack in 2020, and the ransomware attack on US energy firm Colonial Pipeline in 2021.

  • Economic Disruption: Rapid digitalisation in cities can cause disruption by automating industries, leading to job losses in sectors like manufacturing, logistics, and services. As AI, robotics, and IoT become more prevalent, low-skilled workers are particularly vulnerable to displacement. High streets in major cities have been declining for two decades, driven by the rise of e-commerce, especially in developed regions. The COVID-19 pandemic further entrenched this trend by reinforcing online shopping habits. As digitisation and automation impact more sectors, including transport, healthcare and professional services, mitigating the negative impact on job creation will be challenging.

  • Digital Divide: Digitalisation can exacerbate inequality, as access to digital services is often unevenly distributed. Disadvantaged communities may struggle to benefit from smart city innovations without reliable internet access or digital literacy. Managing this digital divide is critical for cities aiming to ensure inclusive growth.

  • Smart City Governance: Technological change’s rapid pace, complexity, and cost can overwhelm city authorities, who may lack the expertise or resources to regulate and integrate new systems effectively. E-government involves moving vast amounts of personal data and services online, increasing the potential for data breaches and corruption. The challenge lies in balancing innovation with robust governance, ensuring that digitalisation enhances city life without compromising security, equity, or public trust.

 

Sustainability

Sustainability considerations are becoming increasingly critical for cities due to environmental degradation, rising climate-related risks, and evolving regulations.

  • The Energy Trilemma: The energy trilemma for cities involves navigating three interconnected priorities: energy security, environmental sustainability, and affordability. Cities must ensure a stable and reliable energy supply while transitioning to renewable and low-carbon sources. This shift, however, is often expensive, making it difficult to maintain affordable energy for residents and businesses. The energy trilemma is particularly acute in cities, as urban areas account for around 70% of global greenhouse gas emissions.

  • Water Security: Water security will become a critical challenge for cities due to expanding urban populations, increasing demand, and climate change's impact on supply. According to the UN, two-thirds of the global population will face water shortages by 2050, with urban areas particularly vulnerable. Cities like Cape Town and São Paulo have already experienced "Day Zero" scenarios, where water supplies were nearly exhausted. As cities expand, ageing water infrastructure and pollution will reduce water quality, exacerbating the issue.

  • Environmental Degradation: Pollution, deforestation, and the depletion of natural resources are putting immense pressure on urban ecosystems. Cities, which are significant contributors to carbon emissions and waste, must address these issues to maintain livability and health standards. Without action, urban areas risk worsening air and water quality, reduced biodiversity, and shrinking green spaces, all of which affect the well-being of residents. A paper published in The Lancet Planetary Health in 2024 found that between 2008 and 2019, air pollution was linked to the deaths of 33,000 people annually in ten Indian cities. According to Swiss air quality technology company IQAir, India has three of the ten worst cities for air pollution.

  • Climate Change Adaptation: Climate-related events like floods, heat waves, and rising sea levels are a growing concern for cities. In nearly all countries, urban areas are home to a large portion of the population and contain much of the most valuable infrastructure and assets. As climate events become more frequent and severe, cities face heightened risks of infrastructure damage and economic disruption, with some potentially becoming uninhabitable. By 2050, as much as 40% of Jakarta could be submerged.

  • ESG Regulations: Sustainability regulations rapidly evolve at local, national, and international levels, pushing cities to adopt greener policies. These regulations, from emissions reductions to stricter waste management protocols, are designed to encourage more sustainable urban development. Sustainability data and technology company ESG Book found that international ESG regulations had increased by 155% in the decade to 2023. For instance, in 2022, the EU introduced new water quality standards targeting pollutants such as nitrates, nitrites, and pesticides. Cities and businesses operating in cities that fail to comply risk environmental harm, financial penalties, and reputational damage.

 

External Shocks

Cities are becoming increasingly vulnerable to external shocks due to rapidly rising migration, climate change, and the increased frequency of health epidemics. These shocks can cause significant economic damage, amplify existing social divisions and strain infrastructure, affecting urban resilience.

  • Health Crises: COVID-19 revealed the vulnerability of urban populations and economies to health epidemics and pandemics. Cities with high population densities and ageing residents are particularly susceptible to health crises. Within cities, limited healthcare resources and unequal access to medical services worsen the impact on vulnerable groups during such outbreaks. Impacts can also vary between cities. Highly centralised cities such as London and New York experienced more significant declines in high street footfall during the COVID-19 pandemic than polycentric urban areas like Paris and Tokyo.

  • Migration: Refugee and migration crises can rapidly increase urban populations, placing strains on housing, jobs, and public services and potentially leading to social unrest. Urban population influxes are becoming more common, driven by civil unrest across parts of Africa and the Middle East. According to the UN, there were 68.3 million internally displaced people globally at the start of 2024, an almost threefold increase in ten years.

  • Weather Events: Due to climate change, increasingly severe weather events, such as floods and heatwaves, will disproportionately impact cities. Poor infrastructure and inadequate planning in many urban areas exacerbate the damage, threatening urban stability. According to insurance firm Aon, direct economic losses attributable to natural disasters averaged USD337 billion from 2018 to 2022, a fifth higher than during the previous five years. The IPCC forecasts that by 2100, global climate risks will double under a 2°C warming scenario.

Principles Of Future-Ready Cities And Communities

To address urban challenges, cities must combine traditional methods, such as building more infrastructure with innovative new solutions. We have grouped successful solutions to urban challenges into three categories, illustrated below. These broad groupings encompass varied specific solutions, not all of which can be listed here. Rather than over-generalising each category, this report focuses on what we think are the most important solutions and case studies.

Future Ready Solutions To Urban Challenges

Boosting Infrastructure Capacity

Cities can increase infrastructure capacity by expanding and modernising transport networks, integrating smart technologies to manage traffic flow, and promoting sustainable mobility solutions. Electrifying transport fleets and enhancing public transport accessibility, as in Singapore, also reduces emissions. Smart city initiatives, like Egypt’s Vision 2030, improve service efficiency and resilience through digital infrastructure. Additionally, adopting circular land use strategies, such as redeveloping brownfield sites, supports urban growth without expanding into greenfields, improving environmental health and reducing urban sprawl.

  1. Enhance Transport Network
    To effectively meet rising demand, urban transport networks must get bigger, smarter and more carbon-efficient. Mass rapid transit solutions orientated around buses and rail, complemented by cycle lanes, can vastly increase the passenger density of transport infrastructure. This is preferable to focusing on car-orientated transport networks in rapidly expanding cities, which can ‘lock in’ traffic congestion problems for decades. Embracing smart technologies to manage traffic flow and improve mobility can also increase a transport network’s capacity by dynamically managing supply and demand. Finally, electrification of the public and private transport fleets, requiring the installation of vast charging networks, can rapidly bring down transport sector emissions.

Case Study: Singapore
Singapore aims to ensure that by 2030, eight out of 10 households will be within a 10-minute walk of a train station. This is part of its broader vision for a car-light society, aiming to make public transport more accessible and convenient for residents. By expanding its rail network and improving connectivity, Singapore intends to reduce dependence on private vehicles, encourage the use of public transit, and enhance urban mobility.

Additionally, Singapore’s i-Transport system leverages traffic data from numerous sensors to generate actionable insights for traffic management and planning. This intelligent transport system facilitates real-time adjustments and long-term planning, significantly improving the efficiency of Singapore’s road networks and contributing to safer driving conditions. Live updates for drivers also help to manage demand during peak travel times. 

  1. Smart Cities

Smart cities enhance urban management and economic growth by leveraging technology to streamline services, reduce costs, and attract investment. One key benefit is reducing operating costs for public services like transport and waste management. In the above case study, Singapore’s i-Transport system lowers the cost-per-passenger for public transport, lessening the tax burden on residents and businesses. Additionally, smart infrastructure can help cities better respond to emergencies, reducing the economic impact of shocks like natural disasters or pandemics. As 80% of urban structures will still exist in 2050, retrofitting existing urban structures to incorporate smart capabilities will be essential to creating smart cities.

Case Study: Egypt’s Smart Cities

Egypt’s Vision 2030 includes the creation of 37 smart cities nationwide. These cities will have modern digital infrastructure, renewable energy sources, green spaces, and intelligent transportation systems. The New Administrative Capital will be the flagship development. As part of the initiative, the government of Egypt and Chinese technology firm Huawei agreed in August 2024 to cooperate on developing the national smart grid. This technology will enhance electricity reliability by detecting faults in the network and automatically reconfiguring it to maintain stability.

  1. Circular Land Use
    A circular approach to land use in cities centred on redeveloping brownfield sites - previously developed but now vacant or underused land - can significantly reduce pressure on urban land. This can prevent outward urban expansion, safeguarding agricultural land and natural habitats. Moreover, brownfield revitalisation brings economic benefits, such as job creation and developing new commercial or residential spaces. It also addresses environmental concerns, as redeveloping these areas often involves cleaning up contaminated land, thus improving public health and the environment. Additionally, using existing infrastructure on centrally located brownfield sites can reduce commute times and lower transportation-related emissions. Cities also gain aesthetic and social advantages by reducing urban blight and rejuvenating neighbourhoods.

    Case Study: European Union
    The EU sustainability strategy targets zero net urban land take by 2050, aiming to stop converting greenfield land. Cities in the bloc are encouraged to prioritise brownfield land development by transforming former industrial and underused sites into mixed-use developments. To facilitate redevelopment, the city implements policies that streamline planning processes, offer financial incentives, and promote public-private partnerships. The EU already reduced net land take by half between 2000 and 2018.

Resilience And Crisis Management

Cities can enhance resilience by diversifying energy and water sources, improving efficiency through integration with broader markets, and regulating utilities for reliability and affordability. Modernising infrastructure with smart technologies enables faster crisis responses, while digital platforms enhance communication and coordination. Crisis preparedness plans ensure effective responses to emergencies, and climate shock mitigation strategies, such as green-blue infrastructure and flood defences, reduce vulnerability to extreme weather. Case studies from the Nord Power Pool, Singapore, Copenhagen, and Rotterdam illustrate these approaches in action.

  1. Energy and Water Security

Cities can enhance water and energy security through several strategies, including diversifying supply. By incorporating multiple, decentralised sources, such as renewable energy (solar, wind), alongside traditional grids and varied water sourcing, cities reduce their reliance on single sources. This ensures continuity during disruptions like natural disasters or cyberattacks. Expanding into and integrating with national and transnational energy and water markets can also improve efficiency and reduce supply variability, for instance, facilitating utilities’ electricity supply and demand management.

Effective utility regulation also facilitates the reliable and affordable provision of utilities. The mismanagement of South Africa’s state electricity utility, Eskom, has resulted in a national electricity crisis, with mounting shortages in critical economic centres such as Johannesburg, Cape Town, and Durban.

Case Study: Nord Power Pool
Countries in the Nord Power Pool (Norway, Sweden, Denmark, Finland, Lithuania, Latvia, Estonia) trade electricity across borders, enhancing energy security by diversifying sources and reducing the risk of localised shortages. This cooperation promotes market stability and supports renewable energy integration by reducing baseload electricity requirements in each country.

Case Study: Singapore
Singapore’s small geographic area limits the potential for large-scale renewable energy production. As a result, the country is increasing power purchase agreements (PPAs) with neighbouring countries. Ten low-carbon electricity import projects from Australia, Cambodia, Indonesia, and Vietnam have received conditional approval. Singapore seeks to import around 6 GW of low-carbon electricity by 2035, up from the initial target of 4 GW.

Singapore - Electricity Import Diversification

Source: Singapore Energy Market Authority

 

  1. Modernisation & Digitisation

    Modernisation and digitisation of infrastructure significantly enhance crisis management and resilience by enabling faster, data-driven responses. Digital transformation can also improve many other aspects of utilities’ businesses, such as increasing productivity, revenues, and profits. Smart technologies, such as real-time monitoring systems, help detect issues like power outages, floods, or traffic disruptions early, allowing cities to respond swiftly. Digital platforms facilitate better communication between authorities and the public during crises, improving coordination. Modern infrastructure with resilient materials and designs can withstand extreme weather or other disruptions, reducing damage and downtime.

    Smart services in e-government increase local government’s capacity to respond to crises by improving citizen engagement, reducing costs, and fostering data-driven decision-making. They also enhance efficiency, convenience, and transparency by digitising processes, reducing paperwork, and enabling 24/7 access to public services.

    Case Study: Copenhagen, Denmark
    In Denmark, ranked first in the UN’s 2024 E-Government Survey, Copenhagen has used e-government tools to respond to the dramatic influx of refugees since 2015. To support immigrants, the government created newtodenmark.dk, an online portal centralising essential information and services for newcomers. Residents also use a single digital ID to access public services and can propose new laws via e-petitions.

 

  1. Crisis Preparedness Plans
    Cities need Crisis Preparedness Plans to respond to unexpected emergencies, such as natural disasters, pandemics, cyberattacks, or social unrest. These plans help mitigate risks, minimise disruptions, and protect residents by ensuring a coordinated and rapid response. Effective crisis preparedness plans incorporate crisis prevention and preparation, crisis response and communication, post-crisis lessons learned and implementation of actions to mitigate future crises.

Case Study: European Union
The EU mandates that member states develop crisis preparedness plans to enhance resilience against emergencies like natural disasters, pandemics, and cyberattacks. These plans include risk assessments, resource coordination, and response strategies, ensuring efficient collaboration between states and EU institutions to mitigate and manage crises effectively. Since the COVID-19 pandemic, the EU has introduced additional health crisis preparedness measures. Member states must improve surveillance, stockpiling of medical supplies, and coordinated pandemic response plans, especially in urban areas.

 

  1. Climate Shock Mitigation

Mitigating climate impacts on cities will require new land-use strategies, including constructing physical defences like sea walls and flood barriers, alongside natural solutions such as increased green (vegetation) and blue (water) infrastructure. Green areas, such as parks, trees, and green roofs, can reduce flooding and urban heat, while blue infrastructure, like canals and wetlands, absorbs excess rainfall and mitigates flood risks. Mitigating the risk of flooding will be particularly important as coastal and riverine properties are increasingly vulnerable to extreme weather events, hurricanes, rising sea levels, and flooding. Historically, many major cities developed near water for trade, with 14 of the world's 15 largest cities located along coasts or rivers. 

Case Study: Rotterdam, Netherlands

Rotterdam is renowned for its innovative water management strategies in response to rising sea levels and increased rainfall. The city has invested in blue-green infrastructure, which includes water plazas, green rooftops, and underground water storage systems. One key example is the Benthemplein Water Square, which doubles as a recreational space when dry and as a water catchment for up to 1.7 million litres during heavy rains. The city also has over 400,000 square meters of green rooftops that help absorb rainwater and reduce heat island effects.

Making Cities Sustainable

Cities can improve sustainability by transitioning to renewable energy, electrifying heating and transport, and promoting circular waste management. This includes adopting low-carbon fuels and reducing waste through recycling and reuse, as in Amsterdam. Cities are also addressing environmental degradation, with Beijing significantly reducing air pollution by shifting to cleaner energy and stricter emissions standards. Global initiatives, such as New York’s Local Law 97, are driving reductions in greenhouse gas emissions through retrofitting and renewable energy investments.

  1. Energy Transition

City-level targets for reducing carbon emissions are driving significant investment in new urban energy systems. According to Oxford University’s Net Zero project, 23% (271 out of 1,186) of major cities have established net zero targets, covering a combined population of 793 million, an increase from 640 million in 2020. Electricity generation must shift towards renewable sources, requiring land for local infrastructure like solar panels, wind turbines, and battery storage. Residential and commercial heating will increasingly be electrified, while industrial processes will adopt low-carbon fuels such as green hydrogen, all of which depend on secure and affordable energy supplies. Urban transport must be transitioned from oil-fuelled vehicles to electric, biofuel and hydrogen-based alternatives. 

Case Study: New York, United States
Through initiatives like Local Law 97 (LL97), New York City has committed to reducing greenhouse gas emissions by 80% by 2050. The city has already reduced emissions by more than a quarter compared to 2006, equivalent to removing 83,000 cars from the streets annually. New York’s strategy includes retrofitting municipal buildings, promoting renewable energy, and implementing penalties for buildings that fail to meet emission standards.

  1. Circular Waste Management

    Cities are crafting innovative circular economy strategies and developing business cases to foster fully circular production. This includes discovering opportunities to minimise energy use for water production, use waste to produce energy, use water efficiently to grow food, and use food waste to create energy.

Case Study: Amsterdam, Netherlands
Amsterdam's Circular Economy Strategy focuses on reducing waste and promoting sustainability by transitioning to a circular economy by 2050. The strategy targets key sectors like construction, food, and consumer goods and aims to halve the use of new raw materials by 2030. Key milestones include promoting recycling, reusing building materials, and encouraging sustainable consumption practices. Amsterdam has implemented initiatives such as urban mining, bio-based building materials, and a zero-waste agenda, setting a strong example of circularity in urban environments.

  1. Reversing Environmental Degradation

Developing industrial capacity within cities significantly increases emissions of harmful pollutants, such as particulate matter, waterborne chemicals, and heavy metals. Proximity to these pollutants, particularly in rapidly industrialising nations like China, India, and Vietnam, contributes to higher rates of premature deaths from outdoor air pollution. Global standards for air and water quality are becoming more stringent. In 2023, the World Health Organization tightened global air quality guidelines for the first time in 15 years. Similarly, the US Environmental Protection Agency proposed stricter rules on particulate matter and drinking water contaminants like lead and copper.

Case Study: Beijing
Beijing has made significant progress in reducing air pollution, particularly in lowering the concentration of harmful particulate matter (PM2.5). Over the past decade, the city's PM2.5 levels have dropped by two-thirds. The city has transitioned from coal to cleaner energy sources like natural gas, closed high-polluting industries, and improved vehicle emissions standards. Other harmful pollutants, such as nitrogen dioxide (NO2) and sulphur dioxide (SO2), have also significantly reduced by 53.6% and 88.7%, respectively.

 

NEOS Advisory Can Help Address Urban Challenges

The increased fluidity, scale and complexity of threats to urban environments mean that planners must utilise external expertise to formulate and implement successful solutions. Neos Advisory offers tailored solutions to address urban challenges, including those covered in this report. Clients benefit from global expertise in infrastructure resilience, energy efficiency, cybersecurity, and other critical areas of urban resilience.

NEOS Advisory - Smart & Future Ready Services

Neos’s world-class team of experts has decades of combined experience tackling the most complex urban challenges. The team takes a data-driven approach, leveraging advanced analytics to inform decision-making, forecast urban growth, and assess the environmental impacts of business activities. The firm’s extensive network facilitates collaboration between public and private sector stakeholders, creating long-lasting and successful partnerships.

Please get in touch if you would like to learn more about how Neos can assist you.

 

 

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