The ‘Metropolitan Century’, in which we find ourselves, is set to see the world’s urban population more than double in its first 50 years. This unprecedented pace of urbanisation is both a unique opportunity and a great challenge, and we cannot underestimate the central role that Asian cities will play in this process over the coming decades.

Already, Asia Pacific’s 100 largest metropolitan areas make up 20% of global GDP, and strong economic and population growth are set to continue across the region. JLL’s Global Research has reviewed over 200 indices that measure city performance and assess city competitiveness to gain insight into current urban dynamics, and how Asia Pacific cities fit into the new global system of cities now and what role they will play in the future.

Tokyo, Singapore and Hong Kong are already truly global cities, sitting alongside London, New York and Paris as the most important, influential and interconnected metropolitan areas in the world (the ‘Big Six’). These are home to headquarters and regional offices for multi-national companies, and possess world-class infrastructure and international connectivity.

However, the forces of globalisation, urbanisation and technological advancement are transforming the global urban hierarchy, allowing cities to set themselves on new and diverse trajectories towards global competitiveness, challenging the ‘Big Six’. In Asia Pacific, in particular, there is more competition than ever between cities. The likes of Shanghai, Beijing and Seoul have globalised quickly and sit on the edge of establishing themselves alongside the ‘Big Six’. Elsewhere, India’s major cities are some of the fastest growing globally; Australasian cities are setting themselves up as leaders in liveability and innovation; and cities such as Bangalore and Shenzhen are carving out important high-tech specialisations to place themselves firmly at the heart of global networks.

JLL’s City Momentum Index 2016 highlighted the dynamic ecosystem of Asia Pacific cities. Of the top 20 cities in the index, 11 were in Asia Pacific. Bangalore leads the way, ahead of Shanghai, Sydney, Beijing and Shenzhen. These rankings demonstrate the rapid rate of change in the region’s cities, with some of the highest levels of construction globally.

The commercial real estate investment landscape is yet to fully mirror this shift, although a ten-fold increase in investment in Shanghai between 2004 and 2014 is indicative of the potential of emerging Asian mega cities. However, six Asia Pacific cities already sit in the top fifteen cities for global real estate investment (Tokyo, Shanghai, Singapore, Sydney, Hong Kong and Seoul). The ‘intensity’ of this investment – that is investment levels as a proportion of GDP – remain relatively low outside of Australasia. There is still huge potential across Asia Pacific cities for future growth in investment volumes. One only has to look at the vast scale of cities such as Jakarta, Manila and Mumbai to understand this.

But to compete successfully on the global stage, cities in Asia Pacific face a range of challenges. One such roadblock to progress is real estate transparency, from market data availability to regulatory and legal frameworks. JLL’s recently released Global Real Estate Transparency Index shows that, among Asia Pacific markets, only Australia and New Zealand sit within the top ‘High Transparency’ tier – while Hong Kong and Singapore sit just outside. Chinese, South Korean, Indian and many Southeast Asian markets remain in the ‘Semi-Transparent’ group. Although progress is being made, for investors to have confidence in these markets, real estate transparency must continue to improve.

Sustainability and liveability are two other challenges to the global competitiveness of many Asian cities. Air pollution remains a massive issue across Indian and Chinese cities, while affordability is increasingly becoming a concern across the region. Singapore’s sustainability credentials and Melbourne’s liveability remain the gold standards in Asia Pacific.

As the world shifts towards an ever-more digital, interconnected and technology-led economy, Asia Pacific cities are rising to the challenge. The likes of Seoul and Tokyo are home to a plethora of tech companies which have become household names – while Bangalore, Shenzhen and Taipei, for example, are important centres for the development of both software and hardware alike. With increased investment in R&D and the promotion of mass entrepreneurialism, could the next Silicon Valley be in Asia?

Asia Pacific’s cities must bolster their current momentum with innovative capabilities and change perceptions in terms of transparency, sustainability and liveability. Those cities which have already established themselves as global players must work hard to stay there, adapting successfully to the changing global economy and remaining ahead of new competition. Emerging challengers, meanwhile, must reform in order to attract more investment. In the ‘new world of cities’, Asia Pacific cities will take centre stage – but which cities are most successful depends on their ability to adapt and remain ‘globally fluent’.

 

Originally posted on www.jll.com.hk/hong-kong/en-gb/news/news-specials