Growing clout of global cities offers property opportunities
Top urban centres will seek to attract talent with non-traditional business districts, and investors should be looking at these new zones
Recent years have seen a renaissance in what Knight Frank calls the global cities. These are the cities major airlines consider it essential to offer flights to, and where the Fortune 500 companies will have an office and international hotel groups invariably have a five-star property.
Among these cities one would find the major financial hubs and commercial centres of the world, including London, New York, Tokyo, Singapore and Hong Kong.
With an expected 1.1 billion new city dwellers in the world over the next 15 years, the global cities - as indentified in Knight Frank's latest report - are the driving force behind their host economies in attracting capital and talent.
This gravitational pull will change the face of office markets in these cities, making them target locations for global property investors as future tenants, landlords and investors look closely into these changes to capitalise on them.
The first change we have noticed is that firms are increasingly relying on high-value knowledge workers to drive business growth, making the workers of the global cities among the most productive in the world, typically outperforming other workers in their host countries.
In terms of gross domestic product per capita, London and Paris largely outperform the British and French economies by 72 per cent and 66.8 per cent respectively, while New York beats the US economy by 35.7 per cent.
Setting up offices in the global cities serves as a talent magnet for securing knowledge workers, who usually prefer the lifestyles available in such cities. As a result, multinational corporations feel it is essential to locate in the global cities, consequently pushing up prices for real estate in cities with the most high-value knowledge workers.
