MIPIM: The rise of ‘new world cities’

Ranked for their overall real estate investment intensity as many as 21 of the top 30 cities are small to medium-sized cities, according to data from JLL.

Described as ‘new world cities’ by property consultancy JLL, mid-sized cities which typically specialize in high-tech and high-value sectors are seeing steady growth in investment and dominate the top ranks of JLL’s Investment Intensity Index.

The index, which compares the volume of direct commercial real estate investment in 150 cities globally over a three-year period relative to the city’s current economic size, showed that these ‘new world cities’ attracted 23 percent of the total global real estate investment volumes last year, up from the 12 percent a decade earlier.

21 of the 30 cities in this year’s index are mid-sized cities in the ranking. Oslo tops the ranking, while other European mid-sized cities that feature prominently include Munich (3rd), Edinburgh (4th), Frankfurt (6th) and Dublin (7th). Some of the US mid-sized cities that made it to the ranking include Silicon Valley (5th) and San Francisco (12th).

According to the report, these ‘new world cities’ are also increasingly attracting cross-border investors, and now represent one-fifth of the global cross-border transactional activity, up from the 14 percent recorded ten years ago.

On the other hand, real estate investment in the ‘emerging world cities’, defined as political or business capitals of large or medium-sized emerging economies, continue to struggle to match their rising economic weight, JLL noted.

None of these cities made it to the top 30 rankings measuring investment intensity. The property consultancy cited issues related to transparency, infrastructural challenges, market restrictions, political and economic volatility as being some of the discouraging factors. In terms of absolute volumes however, JLL said that Shanghai and Beijing are the only cities that have built up a critical mass of investment activity.

Investor appetite remains robust for assets in the world’s most globalized metropolitan economies. As well as leading the rankings for absolute investment volumes, New York, London, Paris and Tokyo also feature in the Top 30 for investment intensity.