5 Cities, 25% of All Global Property Investment

Jones Lang LaSalle reports that 25% of all property investment in the world is made in just five cities, and that more than half of all investments take …

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Jones Lang LaSalle reports that 25% of all property investment in the world is made in just five cities, and that more than half of all investments take place in 30 cities. The five major cities for property investment include New York, Tokyo, London, Hong Kong and Paris, although several up-and-coming areas of investment are positioned to unseat top five. Shanghai, Moscow, Sao Paulo and other cities are attracting more investment dollars, and analysts believe the top players will see their shares dropping as investors look for more diversity and exposure to emerging markets in their portfolios. For more on this continue reading the following article from Property Wire.

More than half of all global real estate investment resides in just 30 cities and a quarter is in the five top tier cities of London, Tokyo, New York, Hong Kong and Paris, new research shows.

But this is set to change by the turn of the decade, however, when newer destinations such as Beijing, Shanghai, Moscow and Sao Paulo will become serious contenders for real estate dollars, says the report from Jones Lang LaSalle.

London and Paris continue to rank in the top five but there are now five from Asia in the top 10 with China expected to see a lot of investment in the next decade.

Three North American cities, New York, Washington DC and Toronto are also in the top 10 and the six fastest growing cities are expected to be in the US.

By 2020, the top 30 cities will become the top 50 as digital communications enable corporations to locate outside traditional hubs, the report says.

‘We are already seeing a shift in where real estate investors are sending their capital. The top 30 cities for real estate investment will become the top 50 as investors diversify their portfolios and corporate occupiers expand their geographic footprints to include emerging cities. Advances in digital communications contribute to this expansion because companies will no longer have to physically cluster in some of the world’s largest cities,’ explained Peter Roberts, chief executive officer of the Americas at Jones Lang LaSalle.

‘In the BRIC countries, Grade A office stock is projected to grow by 10% per year over the next decade. Of these, China has the greatest opportunities with the world’s 10 fastest growing new cities in terms of GDP with Chongqing, Tianjin and Chengdu topping the list,’ he said.

The report points out that cities in China are being transformed by an unprecedented programme of development and modernization. Jones Lang LaSalle has defined 50 secondary and tertiary cities in China that will account for 12% of global economic growth in the next decade.

‘Back in 2004, Tokyo and Hong Kong were the only Asian cities in the top 10 cities for real estate investment. Last year, however, we saw Tokyo, Hong Kong, Singapore, Shanghai and Seoul make the list,’ said Roberts.

While much global attention has been paid to the growth of Asian cities, US cities provide a strong counter balance. Nearly half of the world’s office stock is located in the US, and more than one third of all commercial real estate investment takes place in US cities.

Eleven of those cities are expected to feature among the world’s top 30 largest cities by GDP by 2020. Six of the top 30 fastest growing  cities in terms of absolute GDP will be in the US, including New York, Los Angeles, Chicago, Washington DC, Dallas and Houston.
 
‘Over the next decade, 16 of the top 20 fastest growing mature cities will be in North America. ‘Austin in Texas and Raleigh-Durham in North Caroline will be at the top of the list driven by technology, high value activities and commitment to innovation,’ added Roberts.

Despite European economic turmoil, London has remained the top real estate investment pick with more than $43 billion invested in 2010 and the first three quarters of 2011, a third higher than the world’s second most popular destination, Tokyo.

‘Aside from London, Europe’s other mega cities include Paris, Moscow and Istanbul. They are truly global and offer diverse industries and sectors. Other cities such as Munich and Stockholm offer strong real estate conditions and commitment to innovation, which will serve them well in a low growth environment,’ said Christian Ulbrich, chief executive officer, EMEA.

‘While investors are still choosing to invest in strong, stable and transparent cities, new destinations offer a new world of potential. As the world changes so rapidly, the real estate investment map will follow suit. Corporations will continue to assess their business locations, search for more value and deepen their geographic reach. Investors will diversify their portfolios and begin to search for new cities for their investments in the Asia Pacific and second or third tier cities in the West,’ he added.

This article was republished with permission from Property Wire.

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