aFrika’s highest building rises under an empty sky. Beneath the iconic tower in northern Egypt lies a city that officials expect will one day be home to 6.5 million people. But for now, it’s mostly empty, like the desert that preceded it.
Egypt’s “new administrative capital” is part of a rush of city building. Companies and governments are planning more settlements than ever before in the post-war period, and many are already under construction. There have been 91 cities announced in the past decade, 15 of them in the past year alone. In addition to its new capital in the north, Egypt is building five other cities, with plans for dozens more. India is considering eight urban hubs. Outside Baghdad, Iraq, workers have just captured the first of five settlements.
And it’s not just emerging economies that are rebuilding. Investors in America have been secretly buying land for a new city in California for years. To the east, the deserts of Arizona and Nevada have lured Bill Gates and Marc Lore, two billionaires, each with plans for their own metropolis. Even Donald Trump has proposed ten “freedom cities” in his bid for re-election. In their early stages, many of these projects will be mocked. History shows that many things will fail. But the number and diversity of settlements under construction suggests that some will prevail.
That’s a great thing. Edward Glaeser of Harvard University has hailed cities as humanity’s greatest invention. He notes that agglomerations of money and talent make societies richer, smarter and greener. As businesses move closer to their customers and people move closer to their jobs, growing cities drive economic growth. Economists believe that doubling a city’s population will increase productivity by 2 to 5%. Given both the urgent need for new urban areas and the limitations on physical growth in existing areas, starting over is sometimes a smart decision.
In much of the poor world, land conflicts, slums and poor infrastructure hinder development. The problem will worsen as urban areas grow by an additional 2.5 billion residents by 2050, according to United Nations forecasts, with the new urbanites appearing in regions where cities are already under extreme pressure. Builders hope new metropolises will help ease the pressure. In Nairobi, near where Stephen Jennings, a former private equity boss, is building a new city called Tatu, the commute by public transport for most jobs is well over an hour. Construction is progressing well in Kenya’s newest settlement, where 5,000 residents already live and work in a gated village. Mr. Jennings is building seven other cities in five countries in the region.
Rich world cities have their own problems. The push for a new city outside San Francisco — a project labeled “California Forever” — emerged from an “epic housing shortage” on America’s West Coast, says Jan Sramek, who leads a group of investors in Silicon Valley that made it happen. The group includes Laurene Powell Jobs, Steve’s widow; Reid Hoffman, co-founder of LinkedIn; and Sir Michael Moritz, a venture capitalist, will put their plans for “homes, jobs and clean energy” to a public vote in November. If approved, the city will house up to 400,000 residents on 60,000 hectares of what is now agricultural land. Starting over is a necessary part of the solution to the housing shortage, Mr. Sramek said, citing the high costs of updating existing infrastructure.
California Forever belongs to a group of planned cities that also aim to improve urban life. The developer promotes densely populated neighborhoods in which residents can reach schools, jobs and shops without a car. Today’s city builders have concluded that walkability – or what is sometimes called a “15-minute city” – is a crucial selling point. Some, like Dholera in India and Bill Gates’s Belmont in Arizona, are launching so-called “smart cities,” which use sensors to direct residents away from traffic or tell them the most environmentally friendly time to shower.
A few projects also function as social experiments. Mr Lore’s town of Telosa (taken from the Greek word for ‘supreme purpose’) will end private ownership of land, which will instead be held in a communal trust, with the money generated from it leasing it is spent on public services. Praxis (another Greek word meaning “theory in practice”) has raised $19 million and amassed a waiting list of potential residents who want to “create a more vital future for humanity” in the Mediterranean. A private company is building Próspera, a libertarian special economic zone that accepts cryptocurrency in Honduras, with a mission to “maximize human prosperity.” Praxis and Próspera are partly financed by Pronomos, a venture capital fund founded in 2019 to invest in new cities and run by Patri Friedman (Milton’s grandson) and counting Marc Andreessen and Peter Thiel, two billionaire investors, among its supporters.
Messrs. Andreessen, Lore and Thiel belong to a group of wealthy people with ideas about how cities should be governed. But governments also want to experiment. Abundant capital and low interest rates in the 2010s allowed politicians to borrow cheaply. Although rates are now higher, the enthusiasm for building remains as countries copy each other. Leaders are keen to use state finances to transform domestic economies – and believe new cities will help.
Houses built on sand
Saudi Arabia’s Muhammed bin Salman hopes several shiny new metropolises will attract industries his country lacks, such as financial services, manufacturing and tourism. NEOM, a city consisting of a 170 km long building in the desert, must be the jewel in the crown. Egypt’s new administrative capital was built specifically for the state’s bureaucratic apparatus; the government hopes it will reduce traffic congestion in Cairo. The city already includes the imposing Octagon of the Ministry of Defense – not to be confused with the US Pentagon – which stretches over a square kilometer. In Indonesia, workers are clearing forests for a new capital, Nusantara. For leaders like Indonesia’s Joko Widodo and Egypt’s Abdel Fattah el-Sisi, a new capital promises a legacy, plenty of jobs and the ability to keep voters at bay.
In other countries, rulers have slightly more esoteric ambitions. El Salvador plans to sell bonds paid in bitcoin to fund a crypto city. The kingdom of Bhutan said in December it would build a “mindfulness city,” with neighborhoods designed according to the repeating geometric patterns of a mandala, a Buddhist symbol. The rise of the China State Construction Engineering Corporation, whose workers build cities in Africa, Southeast Asia and the Middle East, has driven down the costs of all megaprojects, whether fanciful or prosaic.
How many of these cities will prosper? Some infrastructure, such as electricity, internet and roads, must be in place before the first resident arrives, meaning upfront costs can be enormous. Mr. Sramek’s company has already invested $1 billion in buying land for California Forever and will need another $1 billion to $2 billion for the first phase of construction alone. Lore expects to raise $25 billion in initial investments for his desert city. Prince Mohammed will rely on his kingdom’s oil wealth for financing NEOM at an initial cost of $319 billion. But the enthusiasm and money may run out; grand projects can become white elephants. Work on Egypt’s $60 billion capital has slowed as the country’s economy falters. The Chinese developer behind the Malaysian Forest City went bankrupt in 2023, before the residents had even moved in.
History points to characteristics that successful projects have in common. State institutions can help anchor cities, as Brasilia (in Brazil) and Chandigarh (in India) showed in the twentieth century. Although both have had problems, people in Brazil and India vote with their feet. Brasilia’s population is growing at 1.2% per year, more than double the national average. Chandigarh, the state capital, is now India’s fourth richest region per person.
The future is less certain for cities that can’t rely on taxpayers to provide jobs and pay the bills, but California Forever and Tatu appear to be based on sensible ideas. As Mr. Jennings puts it, it’s critical that we focus on getting the “boring stuff” right, like roads and sewerage, to create a city that’s walkable and green, but not particularly smart. Besides being what he calls “a dumb city,” Sramek’s California Forever shares another advantage with Tatu: both will piggyback on neighboring economies. “We are five miles from cities on both sides,” says the Californian developer. “The power of demand makes a big difference in how quickly you can grow.” In Britain, Milton Keynes is booming – a town founded in the 1960s and less than an hour by train from London. Reston, a planned city outside Washington, DCis again a success.
Wise urban planners are reluctant to take on debt. Developers have instead started selling stakes in projects, showing buy-in for what are long-term projects. “You’re looking at a 50-year time horizon,” says Mr. Jennings, who admits it “sounds crazy.” He has asked friends for capital, avoiding private equity financiers and their investment horizons, which are typically less than 10 years. California Forever is funded entirely by equity investments. If the two new settlements are successful, their investors will be rewarded. But so will many others. That is the glory of cities. ■
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