Chronicle EditorThese cities have similar characteristics that make them attractive to real estate investors. By 2030 the world’s population will number 8,5 billion people and 75 percent of those will live in cities. As urbanisation continues apace, not all cities will be winners. For global property investors the ability to identify the cities that are growing faster than others provides an edge when it comes to picking the landlords with the greatest chance of success.
According to the third annual Schroders Global Cities Index, the most attractive cities to invest in are Los Angeles, followed by London, Boston, Chicago and New York.
It goes without saying that one common – and 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, whether they are an office company, or a shop, or an industrial unit,” says Tom Walker, co-head of Schroders Global Real Estate Securities.
“So that’s the key thing that we look for – effectively we’re all GDP junkies in the real estate world.”
He adds that there are certain cities around the world that are detaching – from a GDP perspective – away from the countries and regions they are in. This is by virtue of 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 is strong and compelling is Los Angeles, moving from 6th position to 1st position this year.
“A key strength is that LA does not rely on one industry: it’s diversified across financial services, media, trade and technology.” — Moneyweb.
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