Liveability will determine the winning cities of the future

Liveability will determine the winning cities of the future, delegates heard at Real Asset Media’s Creating & Investing in Sustainable, Liveable Cities briefing, which took place last week at EXPO REAL in Munich.

Felix Gold of DIEAG, Petra Blazkova of LaSalle IM, Hideki Kurata of Schroders Capital

“Many elements combine to create a winning city, but liveability has become much more of a focus,” said Petra Blazkova, head of research and strategy, core and core plus capital, LaSalle Investment Management. “It´s a topic that is becoming far more important.”

Paris and London consistently top LaSalle’s European Cities Growth Index because of their ability to adapt to change, their liveability and the availability of skilled labour.

The Nordics cities have also outperformed this year, because they have invested in the development of the industries of the future like technology, pharma, and life sciences and in doing so they have gained an edge over other cities.

Smaller towns can also become winners, not just capitals or big cities, but what matters is a vibrant atmosphere and the presence of young people, which tends to lead to innovation and to economic growth.

“Germany’s ageing population limits long-term growth, but there are significant variations between locations,” Blazkova said. Munich is proving to be the most resilient city, followed by Berlin, and it has consistently risen up the rankings because of its diversified industries and its young population of students and workers.

There is a growing discrepancy between cities, as the winning ones get ahead and the others get left behind. Addressing social issues, including affordability, is crucial in stemming this divergence.

“The social environment for our real estate is becoming a key factor, as is demographics,” said Hideki Kurata, head of real estate France and head of living strategy, Schroders Capital. “The liveability element is more important than ever and it determines the future of the asset.”

Everyone must play their part, Kurata said: at national level with city centre regeneration strategies and infrastructure projects that make it easier and faster for people to get to the office or travel home; at local level by promoting new mixed-use neighbourhoods with affordable housing, retail and office space for small and medium enterprise and start-ups; and at the single asset level.

“Every investor who owns or manages an asset has a duty to reposition it or upgrade it for the future,” said Kurata. “We see improving our portfolio and making it ESG-compliant as our responsibility.”

An example of a new sustainable neighbourhood is Behrens-Ufer in Berlin. “We developed it with sustainability in mind, paying attention to energy sources and using the right materials,” said Felix Gold, managing director, DIEAG Investmentmanagement. “We re-focused the project to create a new commercial district with a riverside promenade and a culture, education and arts angle.”

Zoning regulations require Behrens-Ufer to be a commercial district with no residential component, although its amenities will be open to people from residential areas nearby. “Unfortunately land prices in Berlin are too high to make developing affordable housing viable,” said Gold.