Hanoi and Ho Chi Minh City among the global top 10 most dynamic cities in 2019
Vietnam has a strong presence in the rankings with both Hanoi (3) and Ho Chi Minh City (8) in the City Momentum Index Top 10.
VIETNAM, 15 Jan 2019 – Asia Pacific is home to 19 of the top 20 cities, highlighting the continuing shift of fast urban growth from the West to the East, according to the sixth City Momentum Index published by JLL (NYSE:JLL).
The absence of European and American cities demonstrates a marked East-West growth divide, reflecting Asia's continued rapid urbanization and economic growth, driven by globalization, innovation and demographic factors. The only non-Asian city on the list is Nairobi, in sixth place, which is heavily influenced by significant amounts of infrastructure-focused investment from China.
Jeremy Kelly, Director of Global Research at JLL says: " It's clear that the tech sector is a key driver of both real estate and economic momentum–driven by large technology firms as well as dynamic start-ups in cities like Bengaluru, Hyderabad, Ho Chi Minh City and Shenzhen."
Kelly adds: "These cities need to address the environmental and social impacts of rapid growth such as social inequality, congestion and environmental degradation. The provision of smart, efficient and productive real estate and increased transparency are key factors in driving long-term, sustainable growth." The Chinese city of Xi'an, ranked ninth in this year's Index, has installed an innovative 100-metre-tall air purifying tower to reduce smog and improve air quality.
Vietnam has a strong presence in the rankings with both Hanoi (3) and Ho Chi Minh City (8) in the City Momentum Index Top 10. Ho Chi Minh City is generally viewed as the more business-friendly destination attracting more overseas investment along with a higher corporate presence, whereas Hanoi has lagged commercially but is a city that is swiftly evolving.
Manufacturing is one of the key sources of economic growth in Vietnam, driven in part by robust demand from China. Vietnam is often seen as a lower-cost alternative to China, and FDl has grown on the back of this; while escalation of the trade dispute between China and the U.S. may beneﬁt Vietnam's economy in the long term. Ho Chi Minh City and Hanoi are both pulling in expanding levels of investment from large multinational technology firms, including Microsoft, LG, and most notably Samsung. Infrastructure plans, such as the official opening of Hanoi's first metro line, should also help to ease the congestion caused by the rapidly growing population.
As yet, Vietnam has a small real estate investment market struggling with issues such as low transparency and a limited volume of investment grade stock. However, headway is being made to improve transparency, such as enhancements in access to the land registry, better valuation practices and the increasing application of green building certification system such as LOTUS and LEED.
According to Stephen Wyatt, Country Head of JLL Vietnam, says "Vietnam continues to attract significant interest from foreign investors in all sectors of the property market. The market is becoming more attractive recently on the back of a rise in purchasing power, growth in consumer retail spending, and an expansion in urban population and young demographics,". Furthermore, as JLL's Global Real Estate Transparency Index (GRETI) 2018, it is noticed that Vietnam are moving towards the cusp of the next tier of transparency. Vietnam has now the essential components that enable the country to move forward and reach their full potential for sustainable development in the future.
India's fastest growing cities have been successful in attracting high levels of FDI, with structural reforms (including the Real Estate Regulation and Development Act), encouraging more real estate investment from foreign buyers. A similar story is playing out in Chinese cities, such as Beijing and Shanghai, which are both on the cusp of joining the ranks of the world's transparent real estate markets.
In sum, it takes long-term foreign direct investments to nurture a sustainable momentum and a maturing economy. Therefore, the transparency of governance and infrastructure are really vital for investors' decision, especially in real estate market.
For more information, download the City Momentum Index here
JLL's City Momentum Index measures momentum for 131 of the world's most commercially active cities by tracking a range of socio-economic and commercial real estate indicators over a three-year period to identify the urban economies and real estate markets undergoing the most rapid expansion. The City Momentum Index presents a weighted overall score for the sub-scores of 20 variables. For each variable the model calculates a score based on the city's performance relative to the distribution of all 131 city regions, scaled from zero to one. The top-scoring city for each variable has a value of one, while the lowest-scoring city receives a value of zero. Variables focus on indicators of socio-economic momentum and commercial real estate momentum. All real-estate data is sourced to JLL. Non-real estate data is drawn from a wide range of sources that includes Oxford Economics, United Nations, ACI, GaWC and fDI Markets. The Index also sources data from many national statistical offices. To learn more about cities and real estate, visit www.jll.com/cities-research.