12 October 2012

Winning in Growth Cities Report: New York maintains top spot as largest global real estate investment market

New York - 09 October 2012 - Low global interest rates and ongoing risk are luring investors towards commercial property markets in core global cities, with New York attracting the most investment during the last year, according to Cushman & Wakefield's annual Winning in Growth Cities report launched today at EXPO REAL trade fair in Munich, Germany. The top 25 global cities have in fact strengthened their lead in the past year - increasing their market share to 56% from 46% in 2009. However, while this dominant group will continue to be favoured by investors for their risk averse characteristics, they will in the future face increasing competition from a host of other cities according to the report.

Glenn Rufrano, President and Global CEO commented: "True global cities have gone from strength to strength in the past year, and the investment hierarchy is now well defined. However, the top targets are really 'safety first' choices and will be challenged when recovery comes. In our opinion the hierarchy will in fact expand as cities mature, higher quality property is developed in emerging locations and crucially, as occupiers lead the way into new markets."

A continued strong focus on mature, core liquid markets by investors seeking future growth potential but also better stability and liquidity has seen the top 25 cities increase their importance, with volumes rising 6% versus a 0.8% increase in the market overall.

Boosted by higher yields and higher yield premiums, liquidity and transparency, North America dominates the top rankings, with 15 of the top 25 targets and 17 of fastest growing in the past year. Asia is the second strongest region in the top 25, with 6 current targets and 5 high growth markets. There was little change in the top 25 ranking with 21 of the top cities the same as last year, with Sydney, Seattle, Phoenix and Denver moving up at the expense of San Diego, Hamburg, Melbourne and Beijing, the latter of which lost out due to a slowdown in land sales although it is likely to recover.

Concerning investment by property sector, the office market attracted the most investor capital, accounting for 43%, followed by retail (20.8%), residential (18.1%), industrial (10.3%) and the hotel sector (7.2%).

Global flows of cross border capital reached US$150 billion in the 12 months to Q2 2012, a rise of 4.3% on the same period in 2011. London topped the table for the overseas investors for the second year at US$19.6 billion, with Paris some way behind and New York in third spot. Tokyo and Hong Kong are the top two Asia Pacific cities slotting for foreign investment, in at fourth and fifth respectively.

Across a range of indicators examined in the research, the significance of New York was continually re-enforced, with the city ranking in the top 25 in all of the variables included bar quality of life. London however is not far behind and had more top 5 placings than New York. Other cities in the top 5 were Paris, Tokyo and Shanghai but interestingly only New York and London ranked highly for both scale and softer factors such as innovation and education which create the framework for future growth.

Source: Cushman & Wakefield