LONDON (March 18, 2016) – In 2016, capital flows will shift from countries to gateway and secondary cities and the property industry will respond to increased occupier demands caused by rapid urbanisation, new technology, and social change, according to Emerging Trends in Real Estate® – The Global Outlook for 2016, an annual forecast of global real estate investor sentiment published jointly by PwC and the Urban Land Institute (ULI).

The report points to the strong influence of urbanisation on investment decisions.  Globally, capital flows have begun to shift from countries to both gateway and second-tier cities.  Survey respondents in the US are increasingly in favour of secondary and tertiary markets with better growth opportunities.  This sentiment is evident the 2016 US city rankings, in which eight of the top 10 markets are “18-hour cities”.

In Asia Pacific, the emerging market status of much of the region has led investors to target cities rather than countries.  The report indicates that investors anticipating a peak in the cycle have been gravitating toward the safety of core assets in gateway cities.

Emerging Trends Europe has documented the growing importance to investors of secondary cities across Europe for the last two years.  Birmingham’s strong showing in the 2016 rankings is due largely to the secondary city’s successful implementation of well-designed, higher density developments.

Lisette van Doorn, Chief Executive of ULI Europe, said:

“As key global cities continue to urbanise, densification can help them to become more attractive to people, occupiers, and investors; so the trend for real estate investment to be city focused, rather than country or sector specific, continues.  Emerging Trends in Real Estate – The Global Outlook for 2016 shows that this city by city approach is leading to the rise in investment in second tier cities in Europe such as Birmingham and Lisbon, and in the U.S. there is increased demand for 18-hour cities such as Austin, Denver, San Diego and San Antonio. In Asia Pacific, the urbanisation and densification trend is leading to investors sticking with tried and tested gateway cities such as Tokyo and Sydney or looking for dynamic rapidly urbanising cities such as Manila and Jakarta.”

The report also addresses how a disruptive combination of new technology, social change, and increased occupier expectations are changing the dynamics of the real estate industry.  Favourable returns now depend on a move toward more active real estate management, which prioritises efficient use of space, occupier health and wellbeing, and sustainability.  The collision between rapid urbanisation and technological change has also paved the way for increased investor interest in the logistics sector, which was rated highly as an investment prospect by respondents in the US, Europe and Asia.

Gareth Lewis, Real Estate director at PwC, said:

“The survey shows a future in which the performance of individual cities will continue to diverge at an ever faster rate as a result of the disruptive forces of rapid urbanisation, new technology and social change. Successful cities will be those that can attract developers and investors to invest in increasingly larger and complex city developments and where collaboration between government and the private sector will be absolutely key.”

About the Urban Land Institute
The Urban Land Institute (www.uli.org) is a nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in sustaining and creating thriving communities worldwide. Established in 1936, the Institute has more than 36,000 members representing all aspects of land use and development disciplines.

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