Europe, US ‘still on top’ for real estate

Cities in Asia Pacific represent some of the fastest-growing real estate in the world but they still have work to do if they are to match investment levels in their European and North American counterparts, according to a new report.

The latest Investment Intensity Index by JLL – which compares volume of direct commercial real estate investment in a city relative to its economic size – shows that only four Asia Pacific cities – Sydney (eighth), Melbourne (16th), Hong Kong (28th) and Tokyo (30th) are in the top 30 ranked cities.

JLL said while cities like Bangalore, Hi Chi Minh City and Shanghai are “racing ahead” in speed of development as real estate markets, they still have some room to grow.

“Although the emerging cities of Asia Pacific are attracting an ever greater share of global real estate investment, our latest index shows there is some way to go before they punch their weight in terms of investment intensity,” said Dr Megan Walters, head of research for Asia Pacific at the investment firm.

“However, the balance is starting to shift. What we’re seeing is that real estate investors are looking more and more to developing cities to satisfy their diversification requirements, with an estimated 60 per cent of the global office development pipeline until 2020 projected to come from emerging markets.”

JLL’s report argues that if emerging world cities are to truly attract real estate investors over the long term they will need to “boost transparency, improve regulatory oversight and build robust financial platforms to attract real estate investors”.

It is argued that several ‘emerging world cities’ – Manila, Jakarta, Mumbai, Delhi and Bangalore – might be “making their mark” as real estate investment destinations but they have not yet reached the top tier, for a variety of reasons including regulatory transparency, political volatility and infrastructure challenges.

“This higlhights an immense opportunity for growth,” said Joe Zhou, head of research for China at JLL.

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