JLL’s 2015 City Momentum Index ranks global cities on real estate and socio-economic factors
CHICAGO, and LONDON, January 22, 2015 – Providing a new view into what makes cities dynamic and attractive for future opportunities, JLL (NYSE: JLL) today released its second annual City Momentum Index
(CMI). London, San Jose, Beijing, Shenzhen and Shanghai lead the 2015
CMI, which also features six new cities in the top 20: Ho Chi Minh City
(6) Sydney (11), Dublin (14), Nairobi (15), Melbourne (16) and Nanjing
(20). The CMI goes beyond traditional static economic rankings by
delving into the underlying drivers that keep cities competitive and
dynamic, as well as identifying signals for change that will impact
their future.
Jeremy Kelly, Director, Global Research for JLL,
explains the differentiating factors of the CMI, “While typical real
estate performance rankings reveal most active investment and occupier
markets, JLL’s CMI identifies the global cities changing fastest. By
widening our lens to combine real estate dynamics such as investment,
property prices and construction with socio-economic factors, we can
better understand the drivers of city success by examining signals of
change over the years.
“Having strong momentum presents cities
with opportunities, but also risk. While the 2015 CMI highlights a
city’s success and pace of change today, it doesn’t guarantee the future
performance of commercial real estate or identify the hottest
investment markets. We have seen the technology industry driving cities’
real estate markets year over year, but other trends, ranging from
environment to education, impacted the pace of change, resulting in a
shuffle of cities’ positions on the CMI,” Kelly said.
The list of top 20 cities reveals major trends and changes driving global momentum:
- Technology-rich cities dominate the CMI. Several
of the world’s most tech-rich cities maintained a position in the top
20, including London (1), San Jose (2), Boston (7) and San Francisco
(9). Newcomers to the top 20, thanks to the technology sector, include
Sydney (11), Bangalore (12), Dublin (14), Nairobi (15) and Melbourne
(16).
- China’s cities buoyant despite economic slowdown.
China’s recent economic performance has not impeded seven of its cities
appearing in the global top 20, underpinned by the continued expansion
of its domestic market and middle class population. Trade and
connectivity prove critical to Chinese cities, demonstrated in the
“corridor of dynamics” along the Yangtze River connecting Shanghai (5),
Wuhan (8), Chongqing (10) and Nanjing (20). As China moves up the value
chain, the technology sector has become an important driver of city
success, helping to boost cities such as Beijing (3) and Shenzhen (4).
- London and Dublin outperform continental Europe.
While continental European cities were once again absent from the list
of most dynamic cities, London topped the 2015 CMI and Dublin entered
the top 20 at 14. London’s strong economic fundamentals, cross-border
investment, positive outlook and reputation as a global tech hub boosted
its position. Dublin is currently the world’s fastest-growing office
rental market.
While six new cities entered the 2015 CMI,
established tech and creative hubs, such as Austin, Los Angeles and
Seattle, dropped to just outside the top 20. Hong Kong and Tokyo fell
outside this year’s top 20 due to a temporary loss of impetus, but
nonetheless have strong long term fundamentals. For the first time,
cities in India and Sub-Saharan Africa were represented in the CMI due
to the robust demand for office space from technology companies
(Bangalore, 12) and MNC expansion (Nairobi, 15).
The City Momentum Index, the most downloaded report from JLL’s Cities Research Center, assesses 120 cities with a weighted overall score based on 37 short-term and longer term variables.
Short-term socio-economic momentum variables (40
percent of the model) include recent and projected changes in GDP and
population, air passenger traffic, corporate headquarter presence and
recent levels of foreign direct investment as a proportion of a city’s
economy.
Short-term commercial real estate momentum variables
(30 percent of the model) include recent and projected percentage
changes in office net absorption, office construction, office rents,
shopping mall construction and retail rents, direct commercial real
estate investment volumes and real estate transparency.
Longer term variables (30
percent of the model) that are likely to determine future economic
strength and real estate momentum include high-value incubator
indicators such as university presence and educational infrastructure,
innovation capability, international patent applications and presence of
technology and venture capital firms.
About JLL
JLL
(NYSE: JLL) is a professional services and investment management firm
offering specialized real estate services to clients seeking increased
value by owning, occupying and investing in real estate. With annual fee
revenue of $4.0 billion and gross revenue of $4.5 billion, JLL has more
than 200 corporate offices, operates in 75 countries and has a global
workforce of approximately 53,000. On behalf of its clients, the firm
provides management and real estate outsourcing services for a property
portfolio of 3.0 billion square feet, or 280.0 million square meters,
and completed $99.0 billion in sales, acquisitions and finance
transactions in 2013. Its investment management business, LaSalle
Investment Management, has $53.0 billion of real estate assets under
management. JLL is the brand name, and a registered trademark, of Jones
Lang LaSalle Incorporated. For further information, visit www.jll.com.
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