San Francisco, London and Dubai have been named the three most dynamic cities for 2013 in Jones Lang LaSalle’s new City Momentum Index.
The City Momentum Index (CMI) is a tool designed to capture evolution, to measure change and to identify specific attributes that strengthen the dynamism of growing cities. By tracking the speed of change of a city’s economic base and its commercial real estate market, the tool aims to provide information to help markets and developers to anticipate to cities’ future growth and success.
Jones Lang LaSalle, a financial and professional services firm specializing in commercial real estate services and investment management with 200 offices throughout the world, explained that the index is not only a measure of economic growth and performance. The CMI identifies cities that show both strong short-term socio-economic and commercial real estate momentum as well as a strong basis for future growth.
According to the Jones Lang LaSalle report, strong momentum indicates both opportunity and risk. The cities atop of the rankings will not necessarily show the strongest future performance of commercial real estate, or the most immediately attractive real estate investment environments. They are, however, the cities where change is occurring fastest and, as such, they should be closely monitored.
The criteria mean that thriving cities such as Paris, Seoul and Chicago are not among the 20 most dynamic cities, while rapidly-changing cities such as Lima and Dubai are.
In total, 111 cities were evaluated by the index based on 34 short and longer-term variables, including short-term socio-economic momentum variables such as air passenger traffic, corporate headquarter presence, recent and projected changes in both population and GDP (gross domestic product), short-term commercial real estate momentum variables such as office rents and construction, direct commercial real estate investment volumes, shopping mall construction, and retail rents.
Longer-term variables were also included, aiming to determine future economic strength and real estate momentum using indicators such as university presence and educational infrastructure, innovation capability, and presence of technology and venture capital firms.
As a result, San Francisco, London, Dubai, Shanghai and Wuhan were recognized as the cities that demonstrate the best combination of strong short term socio-economic and commercial real estate momentum and longer term foundations for success.
While London is the only European city to appear on the list, with the others showing less momentum than emerging cities, several powerful and successful European cities benefit from longer-term success due to entrenched strengths in education, innovation and sustainability. Paris, Berlin and Amsterdam, for example, are renowned by their intellectual, research and technological strengths, while Copenhagen is known as one of the world’s ‘greenest’ cities.
The report indicates that Brisbane, Perth and Calgary were among the world’s most dynamic cities a few years ago, but they lost some economic dynamism and showed weaker real estate markets in the last years, pushing them down the CMI.
The report shows that Sydney is leading the world in sustainable real estate development and Toronto is emerging as a global power in technology, with both cities showing strong short-term momentum but not enough future economic strength to be placed among the top positions.