Melbourne climbs its way to the top as one of the world’s ‘hub cities’

Melbourne has achieved the world’s largest gain in rank in the Heitman Real Estate Securities Group’s annual real estate rankings, while Sydney ranked in the top 10.

This year’s Global Prime Real Estate Securities rankings were topped by London, New York, Paris, and Tokyo, with the top four cities retaining their spots from the 2020 ranking.

Melbourne, which benefitted from capital flows and investment into the city throughout the lockdown period, continued its ascension up the list representing the largest gain in rank for the second year in a row, while Singapore, Hong Kong, Frankfurt, and Zurich all fell. Sydney placed ninth.

The rankings are based on a combination of economic indicators, infrastructure and institutions, capital flows, livability, and property market specific factors.

“Although the composition of this year’s rankings remains relatively unchanged, with Dublin marking the only new entrant, we did see some interesting movement in each city’s relative scores,” Heitman Senior Managing Director, Listed Real Estate Securities, John White, said.

“Overall, North American and European cities rose in tandem, generally outperforming those in Asia-Pacific on both ranking and cumulative scores.

“Cities have shown a remarkable ability to bounce back from crises – including from plagues and pandemics – and it appears that we are seeing something similar with the COVID-19 pandemic.

“Cities have been and will continue to be hubs of innovation and creativity, and for those reasons, among others, will remain attractive for people to work and live.

“While the nature of work has and will continue to change as a result of the pandemic, prime cities, particularly those with government funds for infrastructure, business incentives, and housing, will adapt and we expect these cities to remain magnets for people and businesses.”

Among prime market rankings, the most significant updates include:

• Overall, European and North American cities rose in tandem, outperforming those in Asia-Pacific on both ranking and cumulative scores.
  
  Taipei (not ranked) gave way in the rankings to Dublin (ranked 30) as Ireland continued to strengthen its trade, business, and government relationships with the European Union. 

• Among the top performers, London (1) retained its top prime ranking. After the initial shock of the pandemic, there has been a rapid resurgence to activity levels approaching those that were seen in the period prior to the pandemic’s onset.
  
  Mid-September school re-openings and the easing of pandemic regulations translated to the London Underground transit system recording its busiest day since the pandemic began.
  
  Office occupancy has also returned to almost 90 percent of pre-pandemic levels. New York (2) again came in at second, with Google’s recent downtown office purchase demonstrating the commitment of leading firms to the city.

• In the Asia-Pacific region, Australian cities Sydney and Melbourne continued to perform well, with relative economic momentum stronger than other markets and Melbourne (14) exhibiting the greatest upward momentum within the rankings, jumping four places.
  
  Hong Kong (7) and Taipei suffered as tensions with mainland China continued to weigh on business and investor outlook. Singapore (6) fell from fifth to sixth in the rankings year-over-year. Difficulties in global trade and high levels of housing unaffordability drove this continuing trend.

• In Europe, there were mixed results. Financial hubs of Frankfurt (12), Zurich (21) and Geneva (27) all fell significantly, in line with the fortunes of the capital markets. Berlin (17), Vienna (23), and Copenhagen (26) made steady gains in cumulative and ranking scores, primarily around livability scores.

• In North America, the US West Coast outperformed. San Francisco (8) and Los Angeles (5) saw the most significant jumps in the top 10 largely due to strong economic indicators, particularly around the tech sector.
  
  These markets also displayed an enhanced ability to attract talent as traditional eastern centres of human capital continued to display volatility through the pandemic.