The year is 2025. The location is Scunthorpe, north Lancashire, population 2.4m. The northern metropolis has just scored its seventh 1m sq ft office deal in four months. Agents happily announce another record rent at £340 per sq ft on a 40-year lease. The new deals, coupled with the city’s latest teleportation infrastructure, have secured Scunthorpe’s position as a leading world city.
Well, maybe not. While Scunthorpe may have to wait beyond 2025 to gain world recognition, the dream of being a world city is coming true for other conurbations. As Rosemary Feenan, head of the European Research department at Jones Lang LaSalle puts it: “As the world urbanises… evidence is already emerging of growing interest in cities that would have been ‘unconventional’ five years ago .”
These cities include Sydney, Moscow and even Bogota. But it is going to be the Asian cities of Mumbai, Beijing, Shanghai and Hong Kong that are expected to really shine in the next 20 years (see p4). “We believe this will be the ‘Asian century’,” predicts Freeman. “China and India will be influential sources of rising stars.”
World-city criteria
However, those cities will have to meet certain criteria before being considered a world city. Richard Kauntze, chief executive of the British Council for Offices, believes that there are three broad points on which most industry commentators agree.
First, the ability to provide security within a city. This leads to political and economic stability, which are vitally important in influencing the way a city is run, says Kauntze.
Second, there are cultural factors. “The quality of life issue will be more important in the future. You can easily look at language, and elements such as access to airports, but really a city only prospers if people want to be there. If it doesn’t have that quality that people like, then it won’t have the status to generate wealth,” says Kauntze.
Last, there are technology and key infrastructure requirements. How a city can move its population round, and how it can accommodate the latest developments in this technological age, are critical.
For the past 20 years, New York and London have been considered the only true world cities. “London is unquestionably the capital of Europe in the economic power sense,” says Kauntze, while Guy Douetil, a partner in client solutions at Cushman & Wakefield Healey & Baker, adds: “New York and London are the world’s two major financial centres.”
Tokyo misses out in one key aspect. It is widely considered the third city after New York and London. While it has the financial centre and impressive constructions going up such as Hopkins Architects’ and Mitsubishi Jisho Sekke’s S-Project building, it lacks a multicultural element. Paris misses the cut because its financial centre lacks influence.
There is little doubt that New York and London will remain at the top of the heap. As Douetil says: “Something drastic and dramatic would have to go wrong with [those two cities for them] to lose their world-title status.” However, as predicted by Feenan, other cities are seriously vying for at least a piece of the action. Feenan calls them the “rising urban stars” while others term them emerging cities.
They may have three criteria to satisfy, but one area on which all the cities are being most carefully judged is infrastructure. Feenan, an author of JLL’s World winning cities report, says: “In our research, most cities have woken up to the fact that they need good infrastructure to get them on the up and up.”
And this is the one area where the emerging cities have an advantage over the “grand dames”. One agent, who didn’t want to be named, fumes: “London is failing at the moment [with infrastructure]. The mess is being created by the lack of the Crossrail link, which should have been built seven years ago. It should have been built at the same time as Canary Wharf. “
Douetil defends the UK capital’s infrastructure, albeit tongue-in-cheek. “Visitors marvel at the Tube and buses, when they work,” he says. Even so, it is true that Indian cities are gaining ground on London and New York. A corporate briefing paper from CWHB says: “Rapidly evolving IT, telecommunications, road and airport infrastructure, coupled with distinct advantages of cost and highly skilled manpower, have given impetus to industry in India.” Mumbai is a shining example in India. Its GDP alone is set to grow by almost 8% in the next four years, according to figures from JLL.
Still, issues concerning the emerging cities’ infrastructure remain. Beijing, for example, has a major problem with whether its infrastructure is able to cope with more than 4m citizens. Jarl Borthwick, a senior research analyst in CB Richard Ellis’ Hong Kong office, says that pollution and transportation problems are hampering Beijing’s attempts to rapidly open up to the rest of the world, and its potential success as an international city.
Congestion concerns
This is especially worrisome with developments such as the 15-storey Chemsunny Plaza, which is under construction. “Of worry for the city’s increasingly congested roads is the prediction that the number of cars will expand from just over 2m at present to 5m by 2020,” adds Borthwick.
Given its desire to gain acceptance in the rest of the world, the Chinese government is taking steps to tackle the problems. Last year, work began on upgrading and extending the city’s underground and above-ground railway network. And, says Borthwick, there are plans to establish a new airport in the capital, as well as improved road systems within the city and high-speed rail connections to cities such as Tianjin, to the south.
Achieving a place on the world stage would be one thing for these ambitious cities – maintaining it is another. When asked about those cities that have fallen off their pedestals in terms of having reached a peak but progressed no further, Feenan replies that JLL doesn’t talk about cities in decline, rather about cities that are “challenged”.
Those facing such a challenge in her eyes are Rome and Dublin. “They were successful [over the past few years] but they now need to find a new formula,” she says.
Other market commentators point to Barcelona as a city that has failed to capitalise on its time on the world stage. One agent says: “Barcelona was seen as an attractive city, and it had a good upturn with the Olympics [in 1992]. But, since then, it’s not come up to the same level, although it still comes out as a good place to work and live.”
Events such as the Olympics (see p29) can be great instruments for propelling a city to world city status. Feenan believes that pitching for such events brings together stakeholders who otherwise may never have worked together, as well as sparking development that may never have happened. CBRE’s Borthwick says: “The Beijing Olympics in 2008 is the clearest current catalyst for the Chinese government’s plans to develop Beijing into a world-class city.”
It is almost criminal not to cash in on such a world event, but Barcelona is not alone in missing the boat. “Atlanta didn’t get its act together,” says one agent, “so it will be interesting to see what Sydney makes of it.”
So far, the Australian city is doing well, and not enough praise can be heaped on Sydney for the way it has positioned itself on the world stage. Marc King, UBS executive director and head of European premises, says that Sydney is having great success. “Their view of infrastructure and planning is refreshing,” he says.
With all predictions, however, there is a margin for error. But, as detailed in a BCO brief: “What is apparent is that the property market is quite forgiving of those who get it wrong, whether they are related to investment development or occupier markets.”
This could all be good news for Scunthorpe, which may have its day in the sun after all.
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Since the fall of the Soviet system in the 1990s, Eastern European countries have run head-first into the arms of Western countries keen to tap into markets that had been suppressed for decades. As a result, Moscow, Prague and even Bratislava are making huge impacts on the world scene. Undoubtedly, Moscow is leading the pack, and it is predicted by many reports and market opinions to be a world city in 2025. In its 2005 report Emerging Trends in Real Estate, PricewaterhouseCoopers names Moscow as Europe’s second-best development market after Paris. Meanwhile, statistics from Jones Lang LaSalle indicate that, between 2005 and 2009, Moscow’s GDP will grow by almost 6%. One result of Moscow’s rapid growth is the Moscow International Business Centre. The 2.24m sq ft mixed-use development will have 50 floors of grade A office space plus hotel, residential and retail space. As for other Eastern European cities, the PwC report listed Prague, Warsaw and Budapest as strong “buy” markets. |
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London cobweb
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Paris cobweb
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Sydney cobweb
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New York cobweb
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Hong Kong cobweb
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Singapore cobweb
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Source: Jones Lang LaSalle |
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Beijing China’s capital is unrecognisable from what it was 10 years ago. Statistics from Jones Lang LaSalle forecast that Beijing’s GDP will grow by around 10% over the next four years. Bogota “It’s an interesting city to watch,” says JLL’s Rosemary Feenan. She adds that the power and personality of former mayor Antanas Mockus led to developments that have “revolutionised transport” in the city. Mockus is widely credited with bringing stability to the Colombian capital, making it possible for Bogota to become a leading world city. “Individual acts of courage have helped to develop certain cities. And if you believe that size isn’t everything [when thinking about world cities], then those cities will be on your radar screens. They are starting to tick all the boxes in approach to sustainability, and background.” Copenhagen The Danish capital is attractive to developers because of its modern infrastructure, especially its new road-rail link to Sweden. Helsinki The Finnish capital is tipped to do well because of its technology background. “Helsinki will consolidate its position as a leading technology hub,” says JLL’s World winning cities report. “The city’s technological and physical infrastructure is among the best worldwide.” Mumbai The Indian city, home of the Bollywood movie industry, is described as a “dynamic business environment” by Feenan. She adds that the city has a potential for high-value activities, with a degree of originality in the fields of technology and intellectual research. Middle East Feenan says that, from a property perspective, the question of risk in the Middle East is insufficiently understood to confidently talk about the rise in the region’s real estate market. But, she adds: “That’s not to say that Middle Eastern cities don’t create their own successes like Dubai has. However, transparency in the market is a major consideration.” Santiago Santiago is displaying some interesting characteristics, says Feenan. JLL’s World winning cities says that the Chilean city would “reap dividends from an enlarged NAFTA [the North American Free Trade Agreement]”. Sao Paolo Feenan also believes that Sao Paolo, which has a population of more than 18m people, “is going to be a mega city”. She adds: “Sao Paolo still has major problems of politics and infrastructure but, if you have a mega city, it creates its own momentum – and it does create a lot of wealth.” Seoul Digital Media City is the centrepiece development of the Sangam Millennium City project. It is playing a central role in the further development of the hi-tech industry in the South Korean capital. Seoul New Industry is a research and development masterplan to improve industrial structures in the city, and DMC will act as a hub catering to global software development, the IT industry, M&E industry specialisation and digital advancements. It is slated for completion in 2010. Shanghai Shanghai has developed a framework for its long-term development that, by 2025, city authorities hope will cement its position as one of China’s main economic drivers. According to Jarl Borthwick, a senior research analyst in CB Richard Ellis’s Hong Kong office: “As part of a masterplan, about 85% of Shanghai has been slated for an overall project of planned urbanisation through a development concept of ‘One City, Nine Towns’.” Singapore The city’s Concept Plan 2001 is the government’s blueprint for the nation’s physical development for the next 40-50 years. Its vision is to create a world-class city that is dynamic, with a business hub that can function independently on the global playing field. Sydney Australian’s largest city is widely tipped to be among the world’s top cities in the next couple of decades, springboarding from the high profile it achieved with the 2000 Olympics. But the city has had major problems with its infrastructure. However, measures are being taken to build a light railway system of five tram lines between the CBD and the city’s other areas, including Bondi Beach. The cost is estimated at between A$1.2bn and A$1.6bn and it is expected to take more than 15 years to build. |
