The technology sector is increasingly becoming a catalyst in real estate dynamics for key markets around the globe, according to a recent study by global property services firm JLL.
In its second annual City Momentum Index (CMI), the world’s most tech-rich urban areas dominate the top 20, led by London (rank 1) and San Jose (2) in California, maintaining their top-ranking positions, which indicates a revealing trend that drives global momentum.
“Having strong momentum presents cities with opportunities, but also risk,” notes Jeremy Kelly, director of global research at JLL. “Whilst 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.”
He explains that the technology industry indeed drives each city’s real estate market year over year, but other trends, ranging from environment to education, also affect the pace of change in every urban location, “resulting in a shuffle of cities’ positions on the CMI.”
Because of their respective booming tech sectors, Sydney (11), Bangalore (12), Dublin (14), Nairobi (15) and Melbourne (16) also join this year’s top 20, pushing out of the elite ranking Hong Kong and Tokyo, which both experienced a “temporary loss of impetus,” according to the JLL report.
Based on a study of 120 cities covering several sectors – including economy, connectivity, construction, property prices, real estate investment, technology, business start-ups, corporate presence, research and development, and education – the CMI is among the most downloaded reports from JLL’s Research Centre.
“Whilst 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,” Kelly comments.
With commercial real estate a variable, top 20 new-comer Dublin has been identified as the world’s fastest-growing office rental market, whilst several Chinese cities, led by Beijing (3) and Shenzhen (4) on the list are fast-recognising the importance of the technology sector as a driver for success, notwithstanding the Mainland’s national economic slowdown.
Witnessing a recent market revival, Ho Chi Minh City (6) is currently the most dynamic city in Southeast Asia, beating Singapore (17). Multinational corporation expansion in other regions also improved some cities’ performance, such as Nairobi’s, on the annual index.
Sydney Harbour Bridge by Rodney Haywood was used under a Creative Commons licence