The world’s most investible cities
REAL ESTATE INVESTORS LOVE ’EM
One common, key ingredient is above-average GDP growth. “Without economic growth cities will not generate the opportunities, attract the best people and landlords will not be able to charge their tenants a higher rent …” says Tom Walker of Schroders Global Real Estate Securities. “Effectively we’re all GDP junkies in the real estate world.”
He says certain cities are detaching – from a GDP perspective – from their countries and regions. This is through their above-average employment growth, good universities, diversified economies, talented workforces and good quality infrastructure. “In the UK, for instance, the GDP growth generated out of London is higher than that of the UK as a whole.”
A city that’s strong and compelling is Los Angeles (LA), moving from 6th position to 1st position. “A key strength is that LA … is diversified across financial services, media, trade and technology.”
The technology sector has grown substantially over the last few years, boosting demand for office and residential property. “The city is bound by the ocean on one side and national parks on two others. And height restrictions limit the densification of the city.”
Real estate investment trusts (Reits) that invest in less attractive cities are less desirable to Schroders. “If there is a disaster; if rates go up, there is not enough underlying activity to sustain rental prices. ”
Johannesburg lies 212th out of 712 cities, with Cape Town 414th.