High transparency gives mid-sized cities an edge

 —  Article by JLL Staff Reporter

It’s not just the large, globally successful cities like London, Sydney or New York that boast highly transparent real estate markets.

Several mid-sized cities in mature economies are also leading the charge in ensuring their real estate markets are run in a clear, efficient and transparent way. These cities have several things in common: they are English-speaking with long histories of data collection and robust legal frameworks.

With more capital being allocated to the real estate sector than ever before, the benefits of a highly transparent real estate market are clear.

Jeremy Kelly, director of Global Research at JLL, says: “As investors and businesses increasingly delve into city-level dynamics, real estate transparency can be a key differentiator. It plays a crucial role in ensuring efficiency, limiting risks and enhancing competitiveness.”

Here are eight smaller cities from around the world that are reaping the benefits of their efforts in creating transparent property markets.

Manchester, UK

Manchester’s office market is thriving. It’s now the norm for take-up to be in excess of 1 million square foot a year, according to JLL research. The city has truly established itself as the UK’s most globally visible and connected city outside of London, with an expanding airport, significant foreign direct investment and outstanding cultural credentials.

Governance and transparency have played a significant role in Manchester’s success. From the leadership of Sir Howard Bernstein, who blazed a trail for city devolution, to the current metro mayor Andy Burnham, the city has long been at the vanguard of city-level governance in the UK. This long-term vision has allowed this well-run city to flourish.

Birmingham, UK

The UK’s second city has continued to attract multinational interest and investment across multiple fields, including advanced manufacturing, life sciences and professional services. Birmingham’s clear strategy for attracting foreign investment received the seal of approval from fDi Magazine, which gave the city top spot among ‘large cities’ in its recent awards, praising its business friendliness.

Its combination of high transparency, clear strategy and connectivity, which will be boosted by the arrival of the HS2 rail link in 2026, is driving interest in the city’s real estate market. There are currently a number of major development projects ongoing in the city, including Snow Hill and Paradise, which have attracted HSBC and PwC as major tenants respectively.

San Diego, U.S.

The Californian city joins its neighbours Los Angeles and San Francisco at the top of the city-level transparency rankings as they benefit from the state’s predictable and transparent tax procedures. It now sits among the world’s top thirty real estate investment destinations according to JLL data, having attracted more than US$15 billion of direct investment in the three years to the end of June 2018.

The city is embracing new technologies, with strengths in semiconductors and biotech, and was recently recognized for its effective modern governance, receiving a Bloomberg ‘What Works Cities’ initiative award. The city is also adopting smart city technology at scale, creating the world’s largest Internet of Things platform through sensors in street lamps that help to monitor pollution levels, traffic and pedestrian safety.

Denver, U.S.

Denver has emerged as one of the leading mid-sized U.S. tech hubs, having attracted a number of Silicon Valley’s ‘big hitters’ including Google, Apple and Facebook. These corporates are drawn to Denver’s highly skilled talent pool, its high quality of life and a highly transparent environment. ‘Pivot to Colorado’, a public-private initiative, is working hard to attract yet more tech talent to the region.

It’s not just corporates who are attracted to Denver’s transparent real estate market; investors are too. It’s currently one of the top 30 global real estate investment destinations with more than $14 billion of investment in the three years to the end of June 2018.

Portland, Oregon, U.S.

One of the most liveable cities in the U.S., Portland is also aiming to became as attractive to investors as it is to residents. Its Greater Portland Global Trade and Investment Plan, in partnership with Brookings and JP Morgan, aims to amalgamate exports, foreign direct investment and global engagement into a single strategy. This represents a clear example of the city’s integrated and transparent approach, and its ambition in putting the city firmly on the world stage.

In the meantime, it’s also proving popular among corporates, ranking as one of the ten fastest growing cities for office rental growth at 11.7 percent over the year to the end of June 2018, according to JLL’s Global Office Index.

Brisbane, Australia

Brisbane prides itself on its forward-thinking approach to governance as it looks to build a leading position within both Asia Pacific and globally. Its efforts in attracting investment, captured in the Brisbane 2022 New World City Action Plan, are based on “visibility, authenticity and certainty" according to the former CEO of Brisbane marketing John Aitken. Its high level of real estate market transparency is another key pillar in ensuring the Queensland capital remains a sought-after location for international real estate investors, particularly from Asia. Going forward, major new developments – including Queens Wharf, Cross River Rail and Brisbane Live – are set to boost its reputation further.

Edinburgh, UK      

Edinburgh remains a favourite among real estate investors. In JLL’s Investment Intensity Index, which measures real estate investment relative to a city’s economic size, Edinburgh sits in second place globally, behind only Oslo. The city’s high level of transparency is one of the reasons Edinburgh receives more investment than much larger cities, including Barcelona, Rome and Warsaw.

It’s not just in the real estate sector that Edinburgh has emerged as an attractive investment destination. The city ranked second in fDi’s Mid-Sized European Cities of the Future, while it is the UK’s most attractive city for inward investment, according to Arcadis. As the city transitions from a finance destination to a key tech hub, the real estate sector will play a major role in ensuring the city can respond to new challenges.

Glasgow, UK

Glasgow’s star is rising fast as an attractive real estate market. 2018 is set to be the strongest year on record for its office markets, with take-up having exceeded 1 million square feet after the first three quarters, with significant pre-lets by Barclays, HMRC and Clydesdale Bank driving this activity.

The city is successfully drawing in corporates, including government departments, SMEs and fintech firms, and is also establishing itself as a target for investors. Indeed, the city’s strategy for attracting foreign direct investment (FDI) has been praised in fDi’s European Cities of the Future study. The city is committed to transparency in governance, with a ‘smart city’ strategy that has culminated in the Glasgow Operations Centre and OPEN Glasgow, a repository of 400 open datasets.

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