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Innovative cities attract global capital

Auckland punches above its weight



Long term investment with development potential/new-zealand/en-gb/news/916/long-term-investment-with-development-potentialAUCKLANDLong term investment with development potential
Former Fire Station on high profile corner site/new-zealand/en-gb/news/915/former-fire-station-on-high-profile-corner-siteCHRISTCHURCHFormer Fire Station on high profile corner site

Research that ranks global cities often puts Auckland in an impressive spot.

It gets recognised as a business hub that is increasingly innovative and tech-focused.

The link between global capital flows, investment in real estate and technologically advanced cities was highlighted this week by Dr Megan Walters of JLL, who was in Auckland to speak at Tech Week events.

"Auckland is a New World City and features at the top of quality of life and sustainability indices, along with cities like Vienna, Vancouver and Copenhagen. These are cities that have had notable success in attracting footloose capital, companies and talent," Dr Walters says.

This is detailed in the report Globalisation and Competition: The New World of Cities published by JLL's Cities Research Centre in 2015. It compares Established World Cities to Emerging and New World Cities.

"These New World cities are the home of many millennials; a demographic that is demanding less conventional real estate – with a preference for characterful properties and locations in vibrant mixed-use neighbourhoods.

"New World Cities are proving to be particularly attractive for real estate investors who are taking into consideration issues of liveability, sustainability and technological prowess in their strategic decision-making," Dr Walters says.

"Relative to their size, New World Cities attract a disproportionate share of global investment as investors look for value beyond the Established and Emerging World Cities."

The top ranks of the JLL Investment Intensity Index, which compares the volume of direct real estate investment relative to the economic size of a city, is dominated by New World Cities. Oslo is in second place, Auckland in seventh and Austin in 17th.

"These cities all have robust technology sectors supported by a high quality of life and strong environmental credentials, factors which are increasingly being incorporated, either explicitly or implicitly, into real estate investment strategies."

US and Australasian New World Cities with strong research systems and technology credentials are among the top tier, including Auckland, Sydney (4th), Melbourne (10th) and Brisbane (19th) alongside big players like San Francisco (16th). European New World Cities perform particularly strongly, led by innovation-rich, sustainable cities with a high quality of life such as Munich (3rd), Copenhagen (6th) and Stockholm (12th).

Many New World Cities leverage their natural and inherited assets in order to build global profile.

"Auckland, which has notably made it an ambition to become the most liveable city in the world, is now third on Mercer's Quality of Living survey and is becoming a more attractive cultural and work destination. It's also an impressive third of 69 cities on the UN-Habitat's Environment sub-index, which acknowledges a city's efforts to protect natural assets while ensuring growth," Dr Walters says.

In early 2016 JLL's Cities Research Centre published its third City Momentum Index, which tracks the speed of change of a city's economy and commercial real estate market, identifying those cities which have the most dynamic urban economies and are adapting most rapidly to technological and infrastructural transformation.

It covers 120 major established and emerging business hubs across the globe. Auckland is number 20, behind Sydney at number eight and Melbourne at 18.

"The CMI is unique in that it captures the dynamics of a city's real estate market – its rates of construction and absorption, price movement and the attraction of a city's built environment for cross-border capital and corporations.

"The remarkable feature of the 2016 CMI Top 20 is the overwhelming dominance of innovation-rich cities. City momentum involves far more than just raw GDP growth – it is crucially about building the foundations of an innovation-oriented economy through technology, creating cutting-edge new businesses, attracting talent and nurturing vibrant inclusive communities.

"Many of the cities at the top of this year's Momentum Index, such as London, New York, San Francisco and Boston, are home to the world's most dynamic mixed-used districts that are thriving through their ability to incubate and commercialise new ideas. These compact and well-connected city districts promote connectivity, co-production and open innovation. And what bonds them together is real estate."

Dr Megan Walters

Dr Megan Walters is an International Director at JLL, heading research for the Asia Pacific Capital Markets business. Megan is a Fellow of the Royal Institution of Chartered Surveyors with more than 25 years' experience in real estate.

Dr Walters is responsible for client advisory to investors and publications on office, retail and industrial real estate trends in capital markets. Dr Walters is a frequent speaker at conferences both in Asia Pacific and globally.

Dr Walters sits on the research committees of ANREV and APREA and serves as ULI Women's Leadership representative for Asia Pacific on the WLI Global Committee.

She holds a PhD in real estate economics from the University of Hong Kong, a Masters degree in project management from University of Reading and an honors bachelor degree in surveying also from the University of Reading.

Read the NZ Herald story here. ​