Urban build-up worldwide grew by 30% between 1990 and 2015, with new buildings covering an area roughly the size of Sri Lanka, the bank said in a report that was based on satellite data analysis for almost 10,000 cities.
In poor countries about 90% of new buildings sprung up at the edges of cities, extending their boundaries horizontally, while in rich nations, about 35% were built on empty sites within urban centres, the study found.
Such findings appear at odds with the main focus of urban planning in recent years, which has been to create compact cities by building upwards.
But the report's co-author, Somik Lall, said that while taller buildings and high-density cities do bring benefits, such a model should be adapted to local conditions.
"The obsession should not be about building skyscrapers but the passion should be about building liveable cities," Lall, the World Bank's lead urban economist, told the Thomson Reuters Foundation by phone.
Whether urban hubs grow vertically, horizontally or within existing spaces is tied to economic demand, the report said.
With about 70% of the world's population expected to live in urban areas by 2050, up from 55% at present, cities should plan to accommodate all three types of development or risk facing uncontrolled sprawl, overcrowding and congestion, Lall said.
Low-income cities tend to look like "pancakes", growing wide and flat, as newcomers crowd into low-built quarters or settle on the outskirts where land is cheaper, according to the report.
As incomes grow, so do buildings, with richer cities taking the shape of "pyramids", the research found.
Pyramid-shaped cities are generally more liveable - allowing inhabitants to enjoy more floor space in a dense environment - and more productive, as the reduced distance between workplaces and employees boosts productivity, the report said.
They are also better for the environment as sprawling peripheries encroach on surrounding natural areas and often lack adequate transport links, fuelling traffic and pollution.
"If managed well, cities that take a more pyramid-like shape can provide an impetus to accelerate sustainable development by getting people out of cars, cutting commute times and limiting greenhouse gas emissions," Lall said.
Yet, cities cannot leapfrog from "pancake" to "pyramid" with planning regulations alone, as new built central high-rises risk remaining vacant if people cannot afford to live in them, the World Bank researchers said.
For developing cities in particular, it is vital to prepare for horizontal expansion, building transport links and basic infrastructures to ensure liveable conditions on the outskirts and lay the groundwork for future development, the report said.
"The Covid-19 pandemic has highlighted the life-and-death implications of crowded neighbourhoods that are ill-equipped to curb the spread of disease," Juergen Voegele, the bank's vice president for sustainable development, said in a foreword.
"As countries slowly extricate themselves from the pandemic, planning for a better urban future requires understanding the forces that have shaped the cities we inhabit today."
Source: Thomson Reuters Foundation
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