Property investment is at an all time high, according to Cushman and Wakefield’s 2014 review of cities around the world. The survey, called Winning In Growth Cities, looked at the cities experiencing the highest growth in investment terms, and other factors such as performance and price differences[i]. They wanted to examine what made a “winning city” different to their less dynamic counterparts on a global scale.
Cross Border Investment Fuelling Demand
Overall it was found that investment in the real estate sector rose over 17% during this calendar year, with domestic investments rising around 11% and investments from other countries coming in at almost 40%. Cities such as London were benefitting most from this surge in “cross border” investment, with the country attracting a 14% share of international capital. Paris and New York were also seen as attractive places to invest, with each of the capital cities receiving around 5% of foreign investor money.
The “Winning” Cities
In terms of overall market share, however, New York once again recorded the highest growth rates for investment – a record they have held now for four years. It was estimated that the property investment market in the city was worth around $55 billion and growing at almost 13%.
Other cities that made it into the top 10 included Tokyo, Los Angeles, Paris, Washington, Dallas and Hong Kong. Sydney was just outside the top 10 at number 13, with Melbourne sitting at 21. While there was a little movement – either up or down – within the top 10 cities, the levels of growth had remained relatively stable between 2014 and 2013.
The report suggested that while major capital cities were still very much the focus of domestic and international investors, they were predicting an increase in a wider range of metropolitan areas and regional locations due to a lack of supply in the larger “gateway” cities and increasing prices.
Factors Driving Real Estate Markets
The survey also looked at some of the most influential factors that govern and drive real estate markets and property investment around the world. Some of these were as follows:
- Demographics: they predict higher investment growth in Asian and Latin American countries as a middle class begins to grow and develop in the future.
- Infrastructure: investors should look at the cities that are spending money on infrastructure, and particularly transport. Cities that are looking to the future (for example with driverless cars and mass transit solution) will attract a wider group of investors.
- Energy and the environment: Healthier, safer and more efficient cities will always attract commercial, industrial and residential investment.
- Technology: Technology is continuing to change the way we do business, and the report suggests that it may even change the way we think of and use property – for example, will industrial buildings be converted into retail spaces as e-tailing takes off? Cities that are striving to become technological hubs will also benefit from an influx of capital, higher levels of employment and demand for property.