15 May 2017

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Institutional investors should shift their focus from countries to global metropolitan areas. The most successful of these urban markets are those able to respond well to expanding urbanisation, demographic developments and technological innovation, and are likely to offer the best investment opportunities in coming decades. These areas are successful at attracting talent and business activities and therefore outpace the growth of their home countries. Liveability is the most important factor defining successful global metropolitan areas, more so even than the size of the agglomeration, a Bouwinvest REIM study “Global Real Estate Markets” concludes.

The study found that strong urbanisation trends offer opportunities for all real estate sectors. For example, ageing populations are stimulating the growth of small but high quality housing units sometimes in combination with care facilities, while the emergence of burgeoning middle classes around the world, but particularly in Asia, are driving the investment potential in the hotel market. The retail market is facing big challenges from the rise of ecommerce and this is prompting major restructuring in the sector. In the office market, the demand for flexible workspaces in the city continues to grow.

The research also identified the rise of the polycentric city, like Holland Metropole, as an important trend. Traditional cities where the centre forms the economic heart of the agglomeration, are giving way to urban areas with multiple economic hubs. The better integration of economic activities with residential areas is a good way to create affordable and liveable cities where the multiple centres interact symbiotically through excellent infrastructural connections.

In addition to the many opportunities, metropolitan areas also come with big challenges. Scale does not guarantee the success of cities, but a good balance between growth and liveability does. There is yet a lot of work to be done for urban planners and institutional investors alike to achieve this. Bouwinvest is committed to working together with all stakeholders to ensure the right balance between growth and liveability.

Download the full report “Global Real Estate Markets” here.