Which cities are top for urban resilience?
The Savills 2022 Impacts programme examined 500 cities using metrics around economic strength, knowledge economy and technology, environmental and social governance, and real estate investment
New York, London, Los Angeles, San Francisco and Tokyo rank as the world’s top five cities in the 2022 Resilient Cities Index by real estate services company Savills.
The Savills 2022 Impacts programme examined 500 cities using metrics around four core areas: economic strength, knowledge economy and technology, environmental and social governance (ESG), and real estate investment.
Cities build resilience
A number of cities have broken into the top 20 Resilient Cities Index or climbed into the top 10 since 2016, including Berlin, now in seventh place (up from 11th), Atlanta in ninth (up from 14th), and Dallas in 10th (up from 21st) says Savills. Outside the top 20, fast-growing industries such as tech and life sciences have boosted the performance of cities including Copenhagen, Shenzhen, Toronto, Austin, San Diego, Denver, Raleigh, and Eindhoven on the knowledge economy and technology metric and helped these cities climb.
Two of these cities – Copenhagen and Toronto – also appear in the top 10 for ESG in eighth and ninth place respectively, which, when combined with their knowledge economy and tech performance, could be a sign of growth to come, says Savills, given the post-pandemic focus on health, wellness, lower pollution and tackling climate change.
The below graphic shows how the cities have changed in ranking since 2016.
“The economic clout of the world’s biggest cities, combined with the strength of their talent bases and tech sectors, form a virtuous circle to attract real estate investment and help keep New York, London LA, San Francisco and Tokyo at the top of our Index, but many smaller cities are catching up and attracting talent and investment based on their bespoke strengths,” said Paul Tostevin, director in Savills World Research.
“The economic clout of the world’s biggest cities, combined with the strength of their talent bases and tech sectors, form a virtuous circle to attract real estate investment but many smaller cities are catching up”
“Looking ahead, while the entire population of the top 10 cities for ESG is less than seven million and they’re all concentrated within Scandinavia, Austria and Canada, these cities provide a template for a new way of working and living which may become ever-more attractive to footloose professionals, and thereby drive the need for more real estate to meet their needs, which in turn will boost investment in their markets.”
Examining real estate volumes alone, Los Angeles is the most resilient city for investment, says Savills, moving ahead of New York. Dallas takes third position (rising from ninth), and San Francisco stands fourth, nudging European cities down the real estate ranking. Berlin is the highest performing European city for real estate investment in fifth position (up from 17th), ahead of London in seventh (down from third).
No cities from Asia Pacific appear in the top 10 for real estate investment, although their strong performance on other metrics ensures that Seoul, Singapore, Sydney and Shanghai all appear in the top 20 in the Resilient Cities Index overall.
Rasheed Hassan, head of global cross border investment at Savills, adds: “Collectively, the world’s cities attracted record real estate investment last year with $1.3 trillion transacted, 59 per cent up on 2020 and 22 per cent ahead of 2019, the previous highest year. Going forward, we expect that the biggest cities will continue to attract significant volumes, particularly in core sectors which are considered safe havens in times of uncertainty.
“As volumes have returned to, and in some cases gone beyond, pre-pandemic levels, the combination of yield compression and increased finance costs has caused some investors to have to look beyond their typical sectors and geographies as they hunt for precious – preferably inflationary-proof – income.
“As such, some may increasingly target several of the cities that appear mid-table in the Resilient Cities Index in the hope of enhanced returns.”
The Resilient City metrics were defined as follows:
- Economic fundamentals: a secure, dynamic economy of scale, with high personal wealth and strong demographics
- Knowledge economy and technology: high value-add employment with venture capital funding, quality education and innovation in business
- ESG: a society which values sustainable environmental practices, has access to good healthcare, is inclusive and fair with sufficient governance
- Real estate: a liquid and readily invested real estate market, with security of title (Note: real estate has half weighting).
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