Fastest-Growing Cities in Asia Pacific Offer Strategic Business Opportunities

Global urbanisation is set to maintain momentum over the next decade, with cities in emerging Asia driving urban population and economic growth. A rapidly expanding middle class and rising consumer aspirations for improved lifestyles present lucrative opportunities for businesses to capitalise on. To thrive in these dynamic markets, companies must prioritise understanding shifting demands and tailor their products and services to effectively meet the needs of a diverse urban consumer base.

Surging urban incomes in emerging Asia unlock new demand potential

Growth of major cities is expected to remain robust, with 61% of the world’s population forecast to live in urban areas by 2033. Cities in emerging and developing markets will be the drivers of urban population growth, taking 95% of the global urban population increase over the next decade. As these cities expand, economic activity will increasingly concentrate in urban hubs, fuelling infrastructure development, foreign investment and job creation, which will significantly boost income growth.

In Asia Pacific, 18 megacities are expected to demonstrate over a 50% increase in disposable income per capita by 2033

^{Source: Euromonitor International}

This urbanisation surge represents a massive opportunity for businesses to tap into new consumer markets to capture the rising household incomes and build long-term brand loyalty.

While Chinese cities remain the most affluent consumer markets among emerging economies, Southeast Asian and Indian urban hubs lead in disposable income growth. For example, Ho Chi Minh City and Manila, the growing business hubs of Vietnam and the Philippines, are benefiting from the region’s increasing importance in global value chains, especially in the production of hi-tech products, such as machinery parts and electrical components. Both cities offer an attractive investment environment with free economic zones, such as Manila’s IT parks and Ho Chi Minh City’s Hi-Tech Park, translating into better employment prospects and therefore rising disposable income of city inhabitants. Moreover, the rapid growth of the services sector in both cities reflects increasing economic diversification, which is expected to create more value-added job opportunities and promote overall socioeconomic development

Indian metros follow closely in terms of fastest per capita disposable income growth across emerging Asian cities. Delhi is projected to lead with a 73% increase over the next decade, while Bangalore is set to remain India’s most affluent city, driven by the high concentration of multinational enterprises and high-growth tech companies, offering abundant skilled employment opportunities.

Strong income growth in emerging Asian megacities is opening diverse opportunities for businesses, fuelling the rise of a substantial young and affluent middle class, which will drive increased demand for a broader range of quality goods and services.

Asia’s rapid urbanisation opens door to massive consumer markets

Robust economic and income growth, alongside rapidly expanding populations, is also significantly increasing the size of urban consumer markets in developing economies.

The number of developing cities with consumer expenditure markets over USD50 billion is expected to nearly double by 2033

^{Source: Euromonitor International}

Asia Pacific is at the forefront of this expansion, boasting the largest developing consumer markets. Companies that establish a presence early in these urban areas can secure substantial market share in high-growth sectors such as retail, technology, finance and consumer services.

China’s megacities, including Shanghai, Guangzhou, Shenzhen and Beijing, will continue to dominate the landscape due to their robust economic growth, innovative industry structure and extensive career opportunities, as well as their vast populations and rapidly expanding middle class.

Total population in Shenzhen and Guangzhou is set to grow by 19% and 13%, respectively, between 2023 and 2033, boosting the size of consumer markets

^{Source: Euromonitor International}

Even though consumer spending remains under pressure in Chinese cities amid the lingering property market downturn, the country’s efforts to boost urbanisation through the hukou system reform, which enables easier household registration in cities, is expected to support expansion of Chinese urban powerhouses in the longer run.

In addition, cities outside of China, such as Manila, Jakarta, Bangkok and Ho Chi Minh City, are quickly gaining momentum as economic reforms, surging investment and population growth create new centres of consumer spending. India’s urban hubs, especially Delhi, Mumbai and Bangalore, are also poised for significant consumer market growth, bolstered by youthful populations, improving infrastructure and connectivity, and increasing household incomes.

Rising middle class drives discretionary spending opportunities

As incomes rise and living standards improve, growing affluence enables consumers to allocate more of their budgets to non-essential spending such as retail, entertainment, travel, and premium products. In Asia Pacific, cities like Bangkok, Ho Chi Minh City and Xi’an exhibit some of the highest discretionary spending levels, highlighting strong consumption potential. Businesses can tap into these trends by offering premium products and experiences tailored to local consumer demands and shifting consumption patterns.In contrast, residents of Dhaka and Karachi face significant necessity spending pressure, with around 75% of household budgets devoted to essential goods and services. Such disparity underscores the importance of understanding local consumer preferences and needs. To succeed in these diverse markets, companies should prioritise providing relevant products and services, and implementing marketing and pricing strategies that effectively cater to different consumer groups.

To gain more insights into urban market developments, please read our report, Global Cities Trends, and article, Key Trends Shaping the Future of Cities.