JLL has issued a city momentum index showing 19 of the 20 the most dynamic markets of the moment are in Asia. Nairobi is the other one, but just 4 other African cities are in the full list.
This story also includes some non-JLL momentum factors in Australia – fire, water, a major German retailer exiting before it opens, and the country’s immigration drive.
New Zealand’s momentum hinges partly on swings in Australia – when our economy slows, migration to Australia’s construction & mining sectors escalates, but recent economic uncertainty across the Tasman has been matched by a rise in infrastructure, commercial & residential construction here.
Auckland makes the 131-city JLL list, as do all 5 mainland state capitals in Australia.
The list is based on a combination of a weighted index of population, gdp, corporate presence, air connectivity, real estate investment activity & commercial real estate stock.
The Indian dominance
Topping the list is India with Bengaluru top & Hyderabad second, 4 more cities in the top 20 & a total 9 on the full list.
The JLL researchers said: “Bengaluru has an established reputation worldwide for the design & development of technology & electronics. Along with attracting many international companies, it has a vibrant startup culture; it is home to 5 of India’s 8 unicorns (companies valued over $US1 billion). Hyderabad, following closely in second place globally, is also home to many successful startups with a specific focus on ‘deep tech.’ India’s largest startup incubator, ‘T-Hub’, is located in the city and is a public/private initiative between the city government, 3 educational institutions & the private sector.”
China has 9 of the top 20 and another 3 in the full list.
The US has 30, Canada 4.
JLL said the Asian dominance came as urban growth continued to shift away from the West to the East, but a handful of factors in recent international news might make you wonder about the momentum:
- the potential impact of the coronavirus outbreak in China
- for Australia, the decision of German retailer Kaufland to quit that market entirely after spending a year preparing to open a massive Melbourne warehouse & 30 full-service supermarkets around the country, and
- again for Australia, the horrific season of fire outbreaks, combined with a general lack of water plus a failure to prepare with adequate reservoirs, and also combined with an immigration hike over several years.
The China picture
The JLL researchers said of China: “In recent years, strong momentum has been underpinned by massive infrastructure investment & real estate development, and its cities continue to benefit from huge ongoing transport infrastructure investment, including expansion of the national high-speed rail network, new urban metro systems & greater airport capacity.
“Yet the drivers of China’s cities are now changing as they tilt increasingly towards becoming more innovation-oriented economies. A new system of Chinese cities is evolving of truly global scale, where momentum is more & more dependent on levels of innovation, entrepreneurship & liveability. They are home to a new breed of energetic tech-savvy firms that are extending their global footprints, facilitated by China’s ambitious ‘Belt & Road Initiative’.
“However, China’s cities are certainly not without their challenges, with environmental & transparency issues affecting their global competitiveness, while growing international linkages have increased their vulnerability to global trade tensions. Progress is nonetheless being made on several fronts: pollution is now falling in many cities as China’s government introduces radical measures to reduce emissions; and real estate transparency is steadily improving, with its premier cities – Beijing & Shanghai – on the cusp of joining the ranks of the world’s ‘transparent’ real estate markets.”
Ex-mayor of Central Coast’s Gosford points to migration & water supply as changes for the worse
89-year-old Malcolm Brooks, a former mayor of Gosford on the New South Wales central coast and former Liberal Party member of the state legislative assembly, has long been a critic of Australia’s high immigration policy and, in a release to the local Central Coast News on Monday, combined that with concern that the water supply would run dry.
“Unchecked population growth will have a dramatic impact on our quality of life and our politicians seem to be oblivious to this fact. Without adequate planning & government action, our unchecked population growth also threatens our limited water supplies and makes the risk of running out of water more likely.
“Our major resources on the Central Coast are the natural beauty of our waterways & timbered lands, and environmental features. Continuing unchecked & unplanned growth jeopardises the various resources that bring people to the Central Coast and provide the economic foundation for our community.
“Our population in 2001 was some 290,000. Since that time, the population has increased to approximately 311,000, according to the Bureau of Statistics’ 2018 official estimate, and the bureau projects a population of 414,000 by 2036.
“The Millennium drought that impacted the Central Coast between 2002-08 saw our water supplies dwindle to less than 10%… Where will our additional water supply come from?”
German grocery chain pulls out
German grocery chain Kaufland announced plans last year to build a 110,000m² $A459 million warehouse in Melbourne and a network of 30 full-service supermarkets around the country.
Yesterday, Kaufland said it was pulling back to concentrate on Europe.
That followed nearly a year of concerted campaigns to hire professional staff for its development programme, and in-store staff.
Kaufland, a subsidiary of the 4th-largest retailer in the world, the Schwarz Group, has 1300 stores & 130,000 employees in 8 European countries.
The company website appears not to have been informed of the about turn, still telling potential vendors of land today: “Kaufland has an ambitious Australian investment & development programme and we are always looking to purchase suitable & appropriate sites. We look forward to hearing from you with any information on prospective sellers or sites.”
Its requirements went right down to the size of parking spaces – 2.7m x 5.2m – in 400-space parking lots, to serve shops of a preferred 25-30,000m². That’s many times larger than the 500 stores Aldi, also from Germany, has developed in Australia in 2001, and at least 5 times bigger than a large Woolworths or Coles supermarket.
JLL city momentum index
Central Coast News, 20 January 2020: Unchecked population growth will have a dramatic impact on our quality of life
Smart Company, 23 January 2020: Kaufland abandons Australia: A timeline of Schwarz Group’s $500 million blunder
Kaufland Australia on LinkedIn
Business Insider, 26 September 2019: Kaufland, the German retailer described as ‘Aldi on steroids’, is coming to Australia – here’s what you can expect
Attribution: JLL, Central Coast News, Smart Company, Business Insider.