Fund managers looking to invest in the world’s leading cities have come up with a new way to focus on how to pick their stocks.
The team looking after the Schroders Global Cities Real Estate Fund have come up with a formula to rank cities ripe for investment.
They take five factors –
- The size of the population aged 15 and over, because cities with the largest populations tend to have a greater demand for goods and services
- Household income as those earning more can pay higher rents
- University ranking, as higher-earning graduates fuel a city’s economy
- Retail sales, which covers internet businesses as well as traditional stores
- GDP – Productive cities have a greater demand for real estate
The cities are then ranked to indicate where the best real estate investment opportunities might lie.
Los Angeles takes top place
The top ranked global city is Los Angeles.
US cities dominate the index taking 17 of the of the top 30 places, including five of the top 10 spots.
New York, the most populous city in the United States, jumped from fifth to fourth, however Boston and Chicago both fell from third place to sixth and fourth place to seventh respectively.
Hugo Machin, co-Head of Global Real Estate Securities said: “The Schroders Global Cities 30 Index looks at scale and growth of a city. We believe that cities with scale have a structural advantage. However, the model also captures fast growing cities. This means the ideal city would be medium sized with identifiable economic growth.
“It’s no surprise that Los Angeles has reclaimed its place at the top. This is due to a combination of large scale and excellent economic growth. The scale and economic depth of LA makes it a compelling location to work and live.”
Top 20 global cities
| RANK | CITY | COUNTRY |
| 1 | Los Angeles | United States |
| 2 | Hong Kong | Hong Kong |
| 3 | London | United Kingdom |
| 4 | New York | United States |
| 5 | Shanghai | China |
| 6 | Boston | United States |
| 7 | Chicago | United States |
| 8 | Beijing | China |
| 9 | Houston | United States |
| 10 | Sydney | Australia |
| 11 | San Francisco | United States |
| 12 | Singapore | Singapore |
| 13 | Seattle | United States |
| 14 | San Jose | United States |
| 15 | Paris | France |
| 16 | Melbourne | Australia |
| 17 | Toronto | Canada |
| 18 | Atlanta | United States |
| 19 | Washington | United States |
| 20 | Shenzhen | China |
Source: Schroders
