India and China dominate JLL’s newly released 2019 city momentum index, pegging urban markets with a combination of economic and real estate dynamics likely to deliver robust returns over the next three years. Indian cities, Bengaluru, Hyderabad, Delhi and Pune occupy four of the top five spots on the list of 20 cities enjoying the most vibrant growth, with Chennai positioned in seventh.
Although mostly lumped in the back half of the list, nine Chinese cities are also flagged. Nairobi, at number six, is the only identified city outside Asia Pacific. The Vietnamese markets, Hanoi and Ho Chi Minh City, round out the list, along with Manila and Bangkok.
“A common theme this year is that many of the top-performing cities have strong links to the technology and innovation sector,” JLL’s accompanying analysis notes. “The technology sector is a key driver of both real estate and economic momentum, and is propelled not only by the large dominant tech firms, but also by a robust start-up culture.”
Assessments of momentum are based on: socio-economic evidence, such as growth in population, GDP, retail sales, air passengers and presence of corporate headquarters; and real estate market data, such as net office space absorption, rents and investment volume, to gauge the pace at which cities are attracting people, companies and capital. In total, 131 markets are analyzed, worldwide.
Among other cities drawing JLL’s attention are Osaka and Fukuoka, Japan, as emergent secondary markets capturing investors priced out of Tokyo. Somewhat similarly, Austin and Charlotte are medium-sized cities benefiting from in-migration in the United States, particularly due to growth in the digital economy and arrival of younger workers. Athens, Budapest, Amsterdam and Madrid are named cities to watch in Europe.
Ultimately, the report advises that urban livability, market transparency and sustainability will be key to fostering longer-term momentum. “In the world’s most rapidly developing cities with the fastest momentum, real estate is typically associated with bold super-sized projects and impressive skylines; yet the true value of real estate is in providing the infrastructure and environment that facilitates creativity, collaboration, innovation and entrepreneurship,” it maintains.