City Momentum Index Cities Research Center I 2015
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Cities Research Center I 2015 City Momentum Index
JLL City Momentum Index, 2015 2
Tracking Speed of Change
This is JLL’s second annual City Momentum Index (CMI), which tracks the speed of
change of a city’s economic base and its commercial real estate market.
Covering 120 major established and emerging business hubs across the globe, the Index
gauges a city’s short-term socio-economic and commercial real estate momentum (over
a three-year horizon) in combination with measures of ‘future-proofing’ – whether a city
has the essential ingredients to ensure longer-term sustainable momentum in terms of
education, innovation and environment.
The Index 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.
In producing this Index, JLL’s intention is to alert the market to signals of change and to
highlight the characteristics of city success. It does not necessarily hold that those cities at
the top of the CMI will provide the strongest future performance of commercial real estate,
or the most immediately attractive real estate investment environments, but rather that they
are the cities where change is occurring fastest and are the ones to be closely monitored.
Strong momentum can pose both opportunity and risk.
In this paper we identify the characteristics of those 20 cities at the top of the CMI 2015.
We also explore some of the cities that haven’t ‘made the cut’.
JLL City Momentum Index, 2015 3
Key Highlights
The Top 20 cities in the CMI 2015 reveal that:
• The technology sector continues to be a major driver of
city momentum across the globe as the tech giants and
start-ups invest in new technologies and infrastructure and
generate jobs. Several of the world’s most technology-rich
cities appear in the Top 20 – including San Jose (Silicon
Valley), Boston, San Francisco and Bangalore (Bengaluru).
Technology is also an important factor in helping to boost the
positions of cities such as London, New York, Sydney and
Dublin, as well as China’s premier technology hubs – Beijing
and Shenzhen.
• Despite economic slowdown, China is still home to some of
the world’s most dynamic cities – and seven appear in the
Top 20. Shanghai, Nanjing, Wuhan and Chongqing form
a corridor of strong momentum along the Yangtze River,
while the emerging megacity of Beijing-Tianjin in the north
is showing high levels of dynamism. Shenzhen in the Pearl
River Delta has found renewed energy on the back of its
technology sector and neighbouring Guangzhou features just
outside the Top 20.
• London tops this year’s CMI 2015 as a result of robust
economic fundamentals, further boosted by large volumes of
cross-border real estate investment and a positive outlook for
commercial property prices. London also continues to cement
its reputation as a global tech hub. It is joined in the Top 20
by Dublin, which has registered the world’s fastest growth in
office rents over the past year.JLL City Momentum Index, 2015 4
• Ho Chi Minh City is the biggest improver in the CMI 2015
JLL City Momentum Index 2015 and makes it into the Top 20 off the back of strong FDI, as
Top 20
companies look beyond China as a base for manufacturing.
Construction levels are high, although growth rates are
exaggerated by the small size of the existing commercial real
1 London estate market.
2 San Jose
3 Beijing • Sydney and Melbourne have also improved markedly and
4 Shenzhen are new entrants into the Top 20. The residential property
5 Shanghai sector is leading commercial property into upswing, while
6 Ho Chi Minh City the technology sector is providing an unexpected boost to
7 Boston economic growth, particularly in Sydney.
8 Wuhan
• U.S. cities are largely represented in the Top 20 by
9 San Francisco
technology-driven cities such as San Jose (Silicon Valley),
10 Chongqing Boston and San Francisco. Silicon Valley, as the global
11 Sydney hub of the high-tech venture capital industry, sits in second
12 Bangalore position in CMI 2015, and San Francisco and Boston have
13 Dubai been helped by strong growth in property investment during
14 Dublin 2014. Creative TAMI (technology, advertising, media and
15 Nairobi information) sectors are underpinning New York’s position
16 Melbourne in the Top 20, while the technology and creative hubs of
Singapore Austin, Seattle, Los Angeles and San Diego appear just
17
outside the Top 20.
18 New York
19 Tianjin
• Sub-Saharan Africa makes its debut in the Top 20,
20 Nanjing represented by Nairobi. As a regional base for global
JLL CMI includes: corporations expanding into Africa and as the continent’s top
10 areas | 37 variables technology city (‘Silicon Savannah’), Nairobi is witnessing
high levels of property construction, its rental markets are
buoyant and real estate transparency is improving. The city
has also emerged as an important hub for the continent’s
rapidly growing air transport network.
• Bangalore (Bengaluru) provides India’s first appearance
in the Top 20. Robust demand for commercial space from
Property Prices
the technology sector and associated IT-enabled services
Real Estate Investment is boosting office rents. While outside the Top 20, Delhi and
Construction Mumbai are beginning to see an increase in momentum
Corporate Activity as economic growth picks up and demand for prime office
Economic Output space strengthens.
Environment
Education
Technology and R&D
Connectivity
Population
Source: JLL, January 2015JLL City Momentum Index, 2015 5
• Dubai remains in the Top 20, although its rank has dropped as growth in commercial real estate prices
moderates to more sustainable levels. Momentum is expected to continue with activity bolstered by major
project spending relating to Dubai hosting the World Expo 2020.
• Hong Kong and Singapore have recorded a decline in their CMI positions, due to a weaker outlook for their
commercial real estate markets, which, in the case of Hong Kong, has been sufficient to push it temporarily
out of the Top 20. Nonetheless, the two cities still feature strongly on socio-economic momentum and long-
term fundamentals.
• Tokyo has also fallen just outside the Top 20. Economic momentum waned in 2014, but Tokyo is a city with
newfound energy and its commercial property market remains buoyant. We expect it to return to the Top 20
in future CMIs as momentum builds in preparation for the 2020 Olympics.
• Continental European cities are, once again, notable by their absence in the top ranks of the Index. Even
so, they continue to score impressively on long-term fundamentals, with the Dutch Randstad cities,
Munich, Paris, Berlin and the Nordic capitals of Copenhagen, Helsinki and Stockholm performing well on
education, innovation and environment measures.
City Momentum Index 2015 – Top 20
Dublin Beijing
Tianjin
London
San Francisco Nanjing
Boston
San Jose New York Chongqing
Dubai Shanghai
Wuhan
Shenzhen
Bangalore Ho Chi Minh City
Nairobi Singapore
Sydney
Melbourne
Source: JLL, January 2015JLL City Momentum Index, 2015 6
Future Momentum
Having strong momentum presents cities with opportunities as well as risks. While the City Momentum Index
highlights a city’s speed of change, it doesn’t guarantee the future performance of commercial real estate
or identify the hottest investment markets. Many cities with strong momentum are currently facing issues of
affordability and shortages of available real estate, while broader problems of congestion, social inequalities and
environmental issues can often be magnified in cities with rapid change.
Equally other cities that have slower momentum, powerful and prosperous cities such as Berlin, Chicago, Paris,
Randstad and Tokyo (that currently sit outside the Top 20), have the ingredients of longer term success with a
combination of strong governance, a world-class infrastructure and a robust innovation economy. These will be
the cities to watch as they leverage their strengths to ascend to new heights in the City Momentum Index.
City Coverage
The 120 cities covered by the City Momentum Index have been shortlisted on the basis of a combination of
a weighted index of population, GDP, corporate presence, air connectivity, real estate investment activity and
commercial real estate stock. Each city is defined as its metropolitan region as delineated by national statistical
offices or by international organisations (e.g. United Nations).
120 Cities Covered by the Momentum Index
North America 31 EMEA 47 Asia Pacific 34
Vancouver, Calgary, Toronto, Montreal Oslo, Stockholm, Copenhagen, Helsinki Seoul, Osaka, Tokyo
Washington DC, Baltimore, Philadelphia, Dublin, Glasgow, Edinburgh, Manchester, Beijing, Tianjin, Shanghai,
New York, Pittsburgh, Boston Birmingham, London Chengdu, Wuhan, Guangzhou,
Minneapolis, Chicago, St Louis, Detroit Brussels, Randstad, Paris, Lyon Shenzhen, Chongqing, Nanjing,
Xian, Shenyang
Charlotte, Atlanta, Orlando, Miami, Hamburg, Berlin, Dusseldorf, Cologne,
Tampa Hong Kong, Taipei
Frankfurt, Stuttgart, Munich, Zurich,
Denver, Austin, Dallas, Houston Vienna Delhi, Kolkata, Mumbai, Hyderabad,
Lisbon, Madrid, Barcelona Bangalore, Chennai
Las Vegas, Phoenix
Milan, Rome, Athens Bangkok, Ho Chi Minh City, Hanoi, Kuala
Seattle, Portland, San Francisco, Lumpur, Singapore, Jakarta, Manila
San Jose, Los Angeles, San Diego Prague, Budapest, Warsaw, Bucharest,
Kiev, Moscow, St Petersburg Perth, Brisbane, Melbourne, Sydney,
Auckland
Latin America 8 Istanbul
Mexico City, Monterrey Abu Dhabi, Dubai, Jeddah, Riyadh
Lima, Bogota Casablanca, Cairo
Sao Paulo, Rio de Janeiro Cape Town, Johannesburg
Santiago, Buenos Aires Lagos, Nairobi
Source: JLL, January 2015JLL City Momentum Index, 2015 7
Technical Notes
The City Momentum Index presents a weighted overall score for the sub-scores of 37 variables. For each variable, the model calculates a
score based on the city’s performance relative to the distribution of all 120 city regions, scaled from zero to one. Thus the top-scoring city for
each variable has a value of one, while the lowest-scoring city receives a value of zero. The variables used in the model are summarised in
the chart below, combining variables of short-term socio-economic and commercial real estate momentum with variables measuring longer-
term potential – the ‘high-value incubators’.
Socio-economic momentum (accounting for 40% of the model) includes variables relating to the recent percentage changes in city GDP,
population, air passengers and corporate headquarter presence, projected percentages changes in GDP and population, and recent levels of
foreign direct investment (as a proportion of a city’s economy).
Commercial real estate momentum (accounting for 30% of the model) includes variables relating to recent and projected percentage
changes in office net absorption, office construction, office rents, shopping mall construction and retail rents. This sub-index also includes
recent changes in direct commercial real estate investment volumes and real estate transparency.
High-value incubators (accounting for 30% of the model) have been included, as future economic strength and real estate momentum over
the longer term are likely to be partially determined by the quality of a city’s education infrastructure, its innovation capability, environmental
sustainability and the strength of its technology sector. This sub-index includes a weighted score of the presence of the world’s top
universities, international patent applications, air quality, third-party indices of the innovation economy, and the presence of technology and
venture capital firms.
Data sources: All real estate data for the City Momentum Index is sourced to JLL. The non-real estate data is drawn from a wide range of
sources that includes Oxford Economics, United Nations, ACI, OECD, WHO, GaWC, fDi Markets, QS, 2thinknow, WHO and Crunchbase. The
Index also draws data from many national statistical offices.
Data comparability and accuracy: The CMI model is based upon data which we believe to be reliable. While every effort has been made to
ensure the accuracy and completeness of the data used, we cannot offer any warranty that factual errors may not occur. For the vast majority
of cities and variables, data relating to the city region has been used, but in a few cases, particularly in emerging markets, we have had to rely
on national data.
The City Momentum Index Model
Socio-economic Commercial High-value
Momentum Real Estate Momentum incubators
Economic Output Higher Education Infrastructure
Population Construction, Absorption, Price Innovation Capability
Air Connectivity Investment Transactions International Patent Applications
Fortune 2000 HQs Transparency Technology / Venture Capital
Foreign Direct Investment Environmental Quality
Short-term High-value
Momentum incubators
City Momentum Index
Source: JLL, January 2015JLL Regional Headquarters
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Authors Contributing Authors
Jeremy Kelly Ben Breslau David Green-Morgan
jeremy.kelly@eu.jll.com ben.breslau@am.jll.com david.green-morgan@ap.jll.com
Rosemary Feenan Andrew Burrell Myles Huang
rosemary.feenan@eu.jll.com andrew.burrell@eu.jll.com myles.huang@ap.jll.com
Matthew McAuley Josh Gelormini Jane Murray
matthew.mcauley@eu.jll.com josh.gelormini@am.jll.com jane.murray@ap.jll.com
Craig Plumb
craig.plumb@eu.jll.com
To learn more about cities and real estate visit our website
www.jll.com/cities-research
COPYRIGHT © JONES LANG LASALLE IP, INC. 2015.
This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed, which are inherently unpredictable. It has been
based on sources we believe to be reliable, but we have not independently verified those sources and we do not guarantee that the information in the report is accurate or complete. Any views
expressed in the report reflect our judgment at this date and are subject to change without notice. Statements that are forward-looking involve known and unknown risks and uncertainties that may
cause future realities to be materially different from those implied by such forward-looking statements. Advice we give to clients in particular situations may differ from the views expressed in this
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