Savills analysis, which incorporates Oxford Economics data, attempts to identify which global cities are expected to attract the largest net migration over the next five years as a percentage of their population. This is to understand the impact of in-migration on residential and commercial real estate demand.
In Europe, cities that are vibrant and have strong domestic economies have long attracted both domestic and international migrants. Notably, economic arrangements that have allowed people to move relatively freely have made many Northern and Western European cities attractive to workers from the East and South seeking better employment opportunities.
Eri Mitsostergiou, Director of European Research at Savills, explains:
“Countries such as Switzerland and Sweden have strong economies, so their cities attract talented workers looking for high-value jobs, as well as less-skilled workers seeking higher wages. These countries score well in quality-of-life rankings. Tied to this are the comparatively generous welfare systems, including good pensions and healthcare.”
In Asia, Dhaka, the capital of Bangladesh, is forecast to see the highest level of net migration inflow over the next five years, closely followed by cities in India, China and Vietnam.
Across India, people are migrating to cities from rural areas in search of higher-paying jobs outside of the agricultural sector. Arvind Nandan, Managing Director of Research and Consultancy at Savills India suggests Bengaluru and Hyderabad are particularly attractive to younger, well-educated workers. Meanwhile, Vietnam is undergoing an industrial and manufacturing boom. The country’s middle and affluent classes are growing, and people are moving to the cities, particularly Ho Chi Minh.
In North America, the smaller Canadian cities of Calgary and Edmonton, both located in the province of Alberta, are expected to see the largest proportional inflows over the next five years. Across the region, a similar trend is emerging where smaller cities are forecast to see the highest levels of migration inflows.
While some of the smaller cities are seeing a relatively high migration inflow, others are expected to see very low numbers of people arriving and, in some cases, a migration outflow.
Cities in the US with the largest forecast net migration outflows over the next five years include locations where job prospects have suffered, such as Cleveland and Detroit, according to Savills. This is expected, as people move for better employment opportunities. More surprisingly, perhaps, cities that are cultural and business hubs, such as New York and Los Angeles, are also expected to experience net migration outflows.
The next five years continue to tell a story of urban migration around the world. Increasingly, smaller cities with good job opportunities, particularly in the technology sector, and a vibrant lifestyle will be attractive to mobile and well-educated millennials. But, too often, cities do not keep up with the growing demand for real estate and infrastructure.
In Europe, many of the cities expected to experience high migration inflows have already seen population rises. This has led to strong residential rental growth and falling office vacancy rates. In Munich and Stockholm, these stood at just 2.20% and 2.94% respectively for the first quarter of 2019, according to Savills’ Mitsostergiou.