Emerging markets including Jakarta, Lagos and Beirut could soon give global cities like New York and London a run for their money, according to a new report into the global property sector.
The Candy Global Prime Sector (GPS) report, released on Friday, identified 12 rising stars in the luxury property market who are set to out-perform the top world cities.
These emerging cities have shown strong residential price growth as they have become more fully invested, the report says.
Based on analysis from Savills World Research, the report reveals that these cities could out-perform the real estate sectors in prime world cities in the next few years as global investors look to the emerging markets.
The report notes that prices in these emerging cities are generally much lower than in world cities like London, Hong Kong, and New York, making them more attractive to real estate investors.
Savills World Research director Yolande Barnes said an increasing number of investors were looking beyond premier cities to second-tier countries with strengthening economies for new opportunities.
“This more adventurous approach is likely not only to provide higher income returns but also the opportunity for significant capital growth. Real estate values will grow as new cities all over the globe rise on fortune’s wheel. Property rents and values will rise in line with new and growing economic strength,” she said.
The report also identified several characteristics that were drawing investors to these cities.
The factors that helped emerging cities make the list include having English as a first or second language; growing tech industries and financial centers; a favorable business environment for international companies; and a large, young and well-educated population.
Tel Aviv is listed as the top rising second-tier city, where a two-bed apartment in the city center costs about $1.45 million USD. At the other end of the scale, similar accommodation in Chennai, India, is priced at just $160,000.
The report was produced by design firm Candy & Candy, in cooperation with Savills World Research and Deutsche Asset & Wealth Management.