Future of Real Estate in major Cities Globally!

Future of Real Estate in Major Cities Globally

Real Estate Trends and Future Expectations in Major Global Cities

• San Francisco: Rental growth in the last 5 years has decreased by 37%.

• Mumbai: Expected rental growth by 2019 is 15%.

• Houston: Employment is currently 10% above its last peak.

• Shanghai: Net absorption is expected to rise by 49% by 2015.

Cities like Madrid, New York, London, and Paris have outperformed their national economies by 31% - 72%, reflecting a surge in industries that will drive real estate demand. An urban explosion is expected, with an estimated 1.1 billion people being added to city populations worldwide over the next 15 years—almost equal to India’s current population.

The Rise of Global Cities

The demand for real estate is set to rise, but with a difference. Changing trends are leading to the emergence of Global Cities—distinct cities offering premium residential and workspaces for high-value knowledge workers. These cities are attracting real estate premiums, influencing design and location trends, and transforming former industrial areas into new-age districts with collective living concepts that integrate offices, residences, sports, and leisure spaces.

Investors see these cities as high-return opportunities and are investing heavily in infrastructure that caters to talented professionals demanding innovative office layouts. The traditional "desk in a row" model is being replaced by creative, productivity-enhancing workspaces, prompting real estate markets to adapt for sustainable growth.

Emerging Real Estate Trends in Global Cities

A paradigm shift in real estate demand within global cities is leading to new space requirements:

• Super Prime: Luxury buildings with advanced technology, demanding the highest rentals. These are leased by high-end boutiques, mega banks, and exclusive clients.

• Nano-Cores: Mixed-use developments combining commercial and residential spaces with gyms, recreation centers, and public areas.

• CBD Offices: High-quality offices in central locations with superior rental demand, offering a competitive edge over traditional office locations.

• All-in-One Offices: A mix of serviced offices and tech incubators, fostering a collaborative environment where companies share space and resources under an all-inclusive rental model.

Shift from Core Locations to Emerging Markets

The trend of buying in core locations at elevated prices is shifting towards investing in "lands of opportunity." This trend is evident in China and Malaysia, where local investors are collaborating with international wealth to develop leading global city projects.

Airports and Real Estate Development

Airports are playing a crucial role in shaping real estate investment. Properties with direct air connectivity to major global cities are attracting investor interest.

• The UK region has seen increased focus due to direct flights from the Middle East to Birmingham and Manchester.

• Dubai is gaining traction as an aviation hub, further boosting its real estate market.

Political and Economic Factors Influencing Real Estate

Political instability, currency fluctuations, and poor regulations make investments challenging in some Asian and South American markets. However, Nigeria and Botswana are emerging as viable markets due to oil discoveries and telecom advancements.

• Cape Town, Johannesburg, and Lagos are becoming strategic hubs, with Dubai serving as a growing gateway for African investments.

Technological Impact on Real Estate

Technology continues to evolve, significantly influencing real estate development.

• Smart Buildings: Integration of AI and IoT to automate security, lighting, and HVAC systems.

• Office and Cleaning Robots: Reducing space requirements and changing office layouts.

• Driverless Cars and Drones: Impacting transportation and logistics infrastructure.

• 3D Printing: Transforming construction methodologies and cost efficiencies.

• E-Retail Boom: Increasing demand for logistics and smart office buildings.

Super Cities: The Future of Urban Development

Global real estate is witnessing the rise of Super Cities featuring skyscrapers, super-prime offices, and nano-cores.

• Hong Kong has the world’s highest commercial real estate premium—50% higher than Tokyo.

• London leads Europe in rental demand, followed by Paris, Frankfurt, and California.

• The Oasis Tower in Mumbai, upon completion in 2016, will be India’s second tallest building at 372 meters (1,220 ft.), featuring a mix of hotel, office, retail, and residential spaces.

The Rise of New Districts

Former industrial areas and declining neighborhoods are transforming into vibrant economic centers. These areas attract talented professionals seeking affordable yet well-connected residences, spurring economic growth.

• SOMA, San Francisco: Witnessed a 57% rise in tech jobs from 2010-2013.

• DUMBO, New York: Home to over 500 tech firms employing 10,000+ workers.

• London and Beijing: Similar transformations with creative industries driving demand.

Top 10 Office Spaces Worldwide

Innovative office spaces redefine workplace environments:

• Innocent (London)

• Fujitsu (Sydney)

• Pons & Huot (Paris)

• Pinterest (San Francisco)

• Reed Smith (Singapore)

• Google (London)

• Microsoft (Amsterdam)

• DTAC (Bangkok)

• Splunk (London)

• Oro Negro (Mexico)

Cities of Opportunity

Recent trends show a surge in global residential investments due to lifestyle changes and financial opportunities.

• Chinese and Asian firms heavily invest in Sydney, Los Angeles, New York, and London.

• Prime Global Cities Index rose by 6% in 2Q14, compared to 1% the previous year.

• Jakarta and Dublin saw the highest residential market growth.

Investment Hotspots

Real estate markets are expected to soar due to:

• Super HNI Investment: Ultra-high-net-worth individuals are projected to increase from 168,000 to 215,000 by 2023.

• Stable Markets: Cities like London, Sydney, New York, Miami, and Vancouver remain safe investment hubs.

• Recovering Markets: Dublin, Rome, Madrid, and Paris attract investors due to low property prices and improving economies.

The Next Best Watch: Emerging Real Estate Markets

Investors are targeting up-and-coming locations near central business districts. Knight Frank identified the top 10 investment locations:

• Williamsburg, Brooklyn (New York)

• Kachidoki Bay Area, Tokyo

• Barangaroo, Sydney

• 16th Arrondissement, Paris

• Cape Town CBD, Cape Town

• Runda & Gigiri, Nairobi

• Kowloon West, Hong Kong

• Tiong Bahru, Singapore

• Victoria Park, London

• Business Bay, Dubai

Asian Markets: The Next Real Estate Boom

Asia is experiencing an increase in cross-border real estate investments, driven by:

• Connectivity improvements

• Infrastructure development

• Economic growth

Real estate demand in Asian markets is on the rise, fueled by international interest and evolving consumer trends.

The future of real estate is dynamic, with technological advancements, urban transformations, and evolving economic trends shaping global markets. Investors and developers must adapt to these changes to capitalize on the emerging opportunities in the world's leading cities.