Cities, says Christopher Peacock, “are the hallmark of society. Their evolution and development touches every part of business and commerce and for most of us, are a crucial part of our daily lives.” Each year Peacock’s Chicago-based firm, Jones Lang LaSalle, issues a comprehensive report that identifies cities around the globe that offer the strongest potential to investors.

The report, “World Winning Cities,” aims to draw together the essence of contemporary city competitiveness, and to better understand the extent to which property can drive the new city order.

This year’s top three winning cities — Dubai, Dublin and Las Vegas — were selected on the basis of five variables: 1) office construction, 2) office absorption, 3) office rental change, 4) employment, and 5) population growth. The Jones Lang LaSalle report looked at 400 cities worldwide, assessing a variety of economic indicators including demographics, government and cultural issues.

The report notes that the 2003 winners emerged from among the world’s smallest metropolitan areas. With each having a total population of less than two million people, they are places typically referred to as “second and third tier cities.”

“The objective of the World Winning Cities project is to develop an innovative methodological approach to deconstruct cites,” reads the report. “(The project tries) to define and explore these emerging principles of city competition and how they impact real estate.”

According to the report, Dubai “holds the top position” worldwide for both population and employment growth, seeing, each year, increase of 5.8 percent and 8.3 percent, respectively.

The Jones Lang LaSalle analysts — who refer to Dubai as “The Jewel of the Gulf States” — determined that over the last decade the Emirate nation-state has become “the leading economic and trading hub for the Gulf States…(where) much of is success has resulted from a drive to create a favorable environment for business and for providing the physical infrastructure to match.” The report also says Dubai has been actively promoted in the international arena, and the city has been successful in attracting foreign companies. Additionally, Dubai has grown rapidly as a tourist destination — “stimulated by its world renowned airline — and is developing a high-tech image as an Internet hub city.

“However,” the report cautions,” the (Dubai) real estate market is still immature, and the building boom of recent years has been translated into an oversupply of office space.” The report singles out Dublin because it “has emerged as arguably the most successful city economy and real estate market of the last decade.”

And the report includes Las Vegas among its top three choices because as “North America’s fastest growing metropolitan area, its economy has diversified in tandem with low taxes and low regulation (to) nurture new business, thereby attracting new companies and labor.”

Additionally, the report predicts that large cities in China and India, and midsize cities in Europe and the United States are the next likely hot spots for commercial real-estate development. The report notes dozens of cities overlooked by investors in the past decade, envisaging that they will become hubs of commercial development because of economic growth, the re-emergence of technology and the desire of companies to be based near tourist destinations.

“Growth cities” identified by the report are largely located in China, whose economy grew 9 percent to 10 percent in the first quarter of this year. Chinese cities include Shanghai, Beijing and the area known as the Pearl River Delta. All are forecast to become “mega-cities” whose populations will swell to at least 10 million people over the next 10 years.

In the United States and Europe, the Jones Lang LaSalle analysts have high expectations for technology-rich cities such as Austin, Texas; Raleigh, North Carolina; and Helsinki, Finland. The report makes this prediction: “(D)espite the technology shakeout of the last few years. We believe that technological richness is reasserting itself as a key competitive advantage for both mature and developing city economies.”

However, the Jones Lang LaSalle report does not predict a complete recovery in the global technology sector, saying instead that the technology industry has historically attracted the most educated work force, and assures investors that research facilities and buildings designed to accommodate high-tech requirements are worthy places to spend investment capital.

The report predicts that any city attempting to improve its urban landscape and attract tourists would also see a commercial real-estate boom. By way of example, the report notes cities such as Barcelona, Spain; Copenhagen, Denmark; Calgary, Alberta; and Southeast Queensland, Australia.

“Competition between cities has never been more intense. City marketing is becoming a precise science…and trade missions, major infrastructure projects and the securing of prestige sporting and cultural events, are now key ingredients of city strategies,” says Christopher Peacock. “The role of property as a contributors to, rather than as a consequence of, competitive advantage is a vastly under researched area and which we believe will become increasingly vital to any city intent on making its mark on the world stage,” he adds.

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