THE 2017 REPORT The Future Of Real Estate In The World’s Leading Cities 3 GLOBAL TALENT HUBS The Global Cities are achieving rapid growth by attracting the talented, high value workers that all companies, across industries, want to recruit We live in a remarkable era. Around the world over that the tech and creative economy has spread to 490 million people reside in countries with negative emerging market cities like Shanghai and Bangkok, interest rates. Over 60% of the world’s citizens now and tier-two western cities like Austin and Berlin. own a smart phone. An estimated four billion people However, the common message coming from the 34 live in cities, which is up by 23% on ten years ago. Global Cities surveyed in this report is that the urban The above figures highlight three key trends that are economy is increasingly people-centric. Whether a shaping our times. city is driven by finance, aerospace, commodities, Firstly, the era of low to negative interest rates has defence, or manufacturing, the most important asset reduced investors’ expectations on what constitutes is a large pool of educated and creative workers. NOW AVAILABLE an acceptable return. The financial rollercoaster ride Consequently, real estate is increasingly a business that led to this situation has made safe haven assets that seeks to build an environment that attracts and View Global Cities and properties from highly sought after. retains such people. around the world on your device today. Secondly, a volatile economy has not stopped an This year’s Global Cities report looks at how real avalanche of technological innovation. Smartphones, estate is achieving this across the world. tablets, WiFi and 4G have revolutionised the spread of information, increased our ability to work on the move, JOHN SNOW and led to a flowering of entrepreneurship. Head of Commercial, Thirdly, our fast growing cities are centre stage in the Knight Frank innovation economy, and in most of the Global Cities, supply is not keeping pace with demand for both commercial and residential real estate. Consequently, tech and creative firms are increasingly relying upon pre-let deals to accommodate growth, while their JAMES D. KUHN young workers struggle to find affordable homes. President, The previous two editions of Global Cities charted the Newmark Grubb Knight Frank rising importance of technology firms and creative KNIGHTFRANK.COM/GLOBALCITIES workers to established business hubs like New York, NGKF.COM/GLOBALCITIES San Francisco, London and Paris. This edition shows 4 5 GLOBAL CITIES 2017 12-13 34-35 52-53 64 The latest Skyscraper Competing on the San Francisco Tech - Mumbai’s Growth Index shows that office World Stage Growing HQ City Sustaining Infrastructure rents in Asia’s tower Disruptive forces are buildings are growing shaping how firms approach 54 65 apace, with Shanghai as their offices The Comeback Kid - Shanghai: TMT in the City a hotspot 36-37 Seattle 66 Sydney and Brisbane - 55 A Tale of Two Cities Beijing: Amsterdam: A Smart City The Rise of Jing-Jin-Ji 38-39 56 67 Hong Kong - THE MARKET CYCLE THE MARKET Asia’s World City Labs In The City - Delhi: The Hub and Spoke of Boston’s Scientific Cluster North India 40 57 68-69 Accessibility in Tokyo Silicon Hills: Singapore: Decentralisation 41 INVENTION & REINVENTION Austin’s Tech Cluster or Recentralisation Frankfurt - 58-59 70 Germany’s Skyscraper City The Rise of Silicon Beach - Kuala Lumpur - 42 Los Angeles The FDI Hub Dublin: Tech, Talent and Tax 60 71 18-19 43 The Rise of Toronto the Good Industry 4.0 in Bangkok Stand aside Tech Unicorns, here come the Tech Decacorns – meet the CEOs who run Madrid Leads 61 72 start-ups in the $10 billion plus bracket Spain’s Recovery CONTENTS Berlin is Buzzing Trade and Investment 44-45 Builds Bogota 06-09 20-23 Over There 62 73 The major flows in cross- The Super Cities Living in the City More Growth Ahead for border investment are Bengaluru’s Unicorn Club Mexico City Why cities cope best with Back to the future in the mapped out economic transformation Global Cities 63 46-47 10-11 24-25 Tech Mushrooms in Seoul Three Themes for The Age of Extremes Bouncing Back Real Estate Investors Is anti-globalisation a threat on Reinvention to the rise of cities? Cultural revolution comes to 48-49 Dubai and Miami 12-13 A Thousand Futures for Paris 26-27 THE SUPER CITIES Skyscraper Index LIVING IN THE CITY 30 De-zoning - The Future for 14-15 Retail’s Urban Utopia In 2012 it was the Media Centre for the London Olympic Games. Now it New Tech City 28 is home to Here East, an innovative Creative industries thrive in tech and creative work space New York City Designs on the Future - Christophe Carpente 16-17 The secrets behind luxury shop design Tomorrow’s World: London’s Future Businesses 29 18-19 Washington’s Hotel Market 46-47 Meet The Decacorns 30 46-47 Three Themes for A relaxed lifestyle and educated workforce has made Go East Real Estate Investors looks at Austin, Texas, a magnet for tech firms. The city’s portfolio rebalancing, ‘real’ 31 population is growing by 150 people a day assets, and the opportunities CBD Living In Melbourne offered by ‘buildings with beds’ See important notice at the end of this report 6 7 GLOBAL CITIES 2017 SUPER CITIES One World Trade Center, Manhattan, U.S. WRITTEN BY James Roberts, Chief Economist and Editor of Global Cities, Knight Frank We are moving into an era where creative people are a highly prized commodity. Cities will thrive or sink on their ability to attract this key demographic 10 A characteristic of the global economy in the last decade has been the phenomenon of stagnation, and indeed THE AGE OF EXTREMES decline, occurring alongside innovation and success. If you were invested in the right places and technologies, the last Could the rise of anti-globalisation populists undo the success of the decade has been a great time to make money; yet at the world’s gateway cities? same time some people have lost fortunes. The locations that have performed best in this 14 unpredictable environment have generally hosted the creative and technology industries that lead the digital NEW TECH CITY revolution, and disrupt established markets. In many ways, the Apple iPhone symbolises our era. Insatiable growth for a new wave of tech and creative firms is transforming THE IPHONE GENERATION Manhattan’s geography The iPhone was launched in June 2007, just as the U.S. sub-prime mortgage crisis was escalating into the Global 16 Financial Crisis (or GFC). This should have been a terrible TOMORROW’S WORLD time to launch a new product, however the iPhone defied years of rollercoaster economic news to post rising sales Discover the five rising industries who through the GFC, the Euro Crisis, and the commodities rout. will drive office demand in London in the future In the process, the iPhone overshadowed telecom’s old guard, drew other new entrants into smartphones like Samsung, and morphed a complimentary market in tablet 18 computers. Innovation begat further innovation, as the MEET THE DECACORNS ubiquity of smartphones and tablets sparked a revolution in how people access the internet, email, media, and Already the tech unicorns find social networks. Mould breaking companies, from Uber themselves overshadowed by the to AirBNB, have used these devices to become overnight decacorns. We profile three of their CEOs threats to the established order in their industries. THE SUPER CITIES 8 9 GLOBAL CITIES 2017 SUPER CITIES New York, U.S. CONTINUED FROM PG 6-7 FORECAST POPULATION GROWTH IN GLOBAL CITIES FLEXIBLE CITIES Reacting to these fast paced changes, businesses have 2015 TO 2020 Source: The United Nations The industries that drive the modern Global City are not rushed to recruit creative, highly educated staff, and dependent upon machinery or commodities but people; expanded their offices in the cities that attract the iPhone which delivers economic flexibility. A locomotive plant 18.7% generation. This ‘generation’ is not characterised by age, 18.5% cannot easily retool to make electric cars, raising a but an adaptive, free thinking mindset. Firms want to lock in 17.3% shortcoming of the single industry factory town; while those individuals, with offices that match workers’ lifestyle an oil field in Venezuela has limited value for any other and commuting needs. commercial activity. However, a modern office building in a 15.1% 14.7% 14.3% CREATIVE DESTRUCTION 14.2% Global City like Paris can quickly move from accommodating bankers in rows of desks to techies in flexible work space. The iPhone’s success demonstrates the phenomenon So there is adaptability in the people in a service economy that the economist, Joseph Schumpeter, called ‘creative city which is matched by the city’s real estate. destruction’. This is where changes in technology and the This means large modern cities can quickly adapt to the 9.5% companies born of this fresh innovation have a Darwinian 9.4% forces of creative destruction. In 2007, investment banks effect on a previous generation. The new kids on the 8.5% 8.5% 7.8% were the stars of the New York and London economies. 7.7% economic block prosper at the expense of the old guard 7.1% 6.9% They typically consisted of a small cadre of senior traders unless established firms quickly change with the times. and financiers, supported by a large infantry of recent 5.5% 5.2% In Schumpeter’s era, the rise of aeroplanes, automobiles, 5.0% graduates, HR, marketing, IT, research, accounts, and 4.5% 4.5% and petroleum created economic booms in the cities other support workers.