Arcadis study: China ranks first, U.S. second in generating significant GDP from built assets

Highlands Ranch, Colo. — The U.S. continues to trail China in generating the highest financial returns to its economy and gross domestic product (GDP) from built assets, according to the 2016 Global Built Asset Performance Index released by Arcadis. The index ranks how tangible buildings and infrastructure contribute to each country’s GDP across 36 of the world’s largest economies.

The report finds China’s infrastructure contributes $10.4 trillion from its built assets while the U.S. ranks second at $5.4 trillion. However, a new 10-year infrastructure investment plan proposed by the incoming U.S. administration could have a lasting impact on U.S. built assets and on the U.S. economy as a whole.

The Arcadis index reveals China’s economy gains enormous strength from its built assets — accounting for 54 percent of GDP financial performance in the year studied — compared to 30 percent of GDP returns for the United States. Asset performance is defined as the amount of economic wealth from each country generated from built assets.

The full findings of the Arcadis Global Built Asset Performance Index are available at: https://arcad.is/gbapi-pr.

While the U.S. still claims the No. 2 spot for built asset productivity, decades of chronic under-investment have reduced the performance of existing U.S. assets over all. This loss of productivity from transit, rail, ports, aviation, buildings and roads is pulling negatively against the U.S. GDP’s return on assets. Meanwhile, Mexico, which trails the U.S. in total income from built assets, currently receives nearly 64 percent of GDP returns thanks to its reliance on infrastructure spending.

According to the Arcadis Global Built Asset Performance Index, the top 10 countries by overall built asset income (income from built assets 2016 in US$) are:

1. China ($10.4 trillion)
2. United States ($5.4 trillion)
3. India ($3.6 trillion)
4. Japan ($1.9 trillion)
5. Mexico ($1.4 trillion)
6. Indonesia ($1.2 trillion)
7. Germany ($1.0 trillion)
8. Brazil ($966 billion)
9. Turkey ($807 billion)
10. France ($794 billion)

Investment and asset management directly impact the productivity and income-generating capacity of built assets. According to Tom Morgan, Arcadis business advisory leader, North America, “This drag on the economy caused by years of under-investment can start to turn around with new public and private funding. For instance, should the U.S. invest $1 trillion over the next 10 years, it could result in an increase of three percent additional growth in built asset performance over that 10-year period. Without that infusion, the U.S. is forecasted to grow by only one percent of GDP returns. While three percent may appear a small percentage, the impact is huge.”

Morgan continued, “Making more sophisticated use of built assets can also squeeze higher, more sustainable financial performance from existing infrastructure, even if overall funding lags. For instance, implementing asset management strategies such as building information modeling, analytics or visualization technologies can maximize financial performance on existing assets from 15 percent to 20 percent. Examples include Airbnb-type office leasing or using drones for maintenance inspections.”

Asset owners can also maximize returns by taking an integrated, holistic view of their businesses or cities so they can better understand their total expenditure (TotEx).

Morgan said, “Transportation, infrastructure and water agencies typically work in silos when it comes to budget allocation. Yet planning across their total assets can optimize municipal and state budgets and maximize financial performance. Asset investment strategies performed with centralized planning that leverage people, data and analytics can produce a more efficient spend. Improved design and integrated thinking ultimately reduce costs and produce better outcomes.”

The 2016 Built Asset Performance Index is an alternative economic indicator that measures how built assets can power more growth to economies and contribute to stronger, sustainable performance. Conducted with the Centre for Economics and Business Research (CEBR), this year’s Arcadis index examines the income generated by buildings and infrastructure – homes, schools, roads, airports, power plants, malls, railways, ports and all other fixed assets – across 36 countries that collectively represent 78 percent of global GDP. The index measures returns in terms of purchasing power parity to ensure figures are adjusted to how much they are worth in that country.