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Smart investors seek out the best cities, rather than the best countries, when looking for the most competitive places to put their money. Alice Breheny, global head of research at TH Real Estate, looks at where the most promising opportunities are

The top 100 richest cities in the world account for around one-third of global GDP. To access 25% of available global output, you would need to target the 58 largest cities by GDP. So somewhere between 50 and 60 seems a sensible number of cities to start with when constructing a global real estate strategy.

Core investors should be mindful, though, that some cities might fall out of the global top 50 over the next decade. And some will see their position in the global hierarchy deteriorate, meaning they become less competitive.

While GDP is a better guide to the depth and maturity of real estate markets than population, it is somewhat crude – given the distinct drivers of each real estate subsector. For office investments, the financial and business services (FBS) contribution to GDP is probably a more appropriate proxy for demand. FBS output is concentrated in fewer cities than wider GDP and would give investors focused on offices a shorter list of target markets: the top 15 cities account for one-third of global FBS output. This is expected increase to around 20 cities by 2030 as we see the rising importance of cities in emerging…

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