Vietnam’s Ho Chi Minh City and Hanoi have entered the global top 10 in JLL’s City Momentum Index (CMI), coming in at second and eighth place respectively. This year Asian cities make up half of the top 10, with India’s Bangalore grabbing the top spot for the first time, knocking London off number one place, which it has held for the previous two years.
 
The annual index covers 134 major business hubs across the globe, tracking the speed of change of a city’s economy and commercial real estate market, and identifying cities with the most dynamic conditions.
 
“Our research shows that the Asia Pacific region is home to more than half of the world’s 30 most dynamic cities and real estate markets, highlighting the rise of cities like Bangalore and Ho Chi Minh City as major hubs of commerce,” says Dr Megan Walters, Head of Research, Asia Pacific at JLL. “Technology is becoming a major driver of momentum with several cities in Asia providing fertile environments for innovation and are successfully integrating into global networks.”

According to the index, the world’s most dynamic cities share the ability to embrace technological change, absorb rapid population growth and strengthen global connectivity.

The success of Vietnam’s two major commercial hubs, Ho Chi Minh City and Hanoi, is underpinned by favourable demographics and significant foreign direct investment (FDI) as the government takes steps to liberalise the business environment.

In Vietnam, low costs, rapid consumer market expansion and economies transitioning towards higher-value activities have driven significant levels of FDI and the construction of office, retail and hotel stock to meet growing demand. Vietnam’s Foreign Investment Agency registered FDI of more than US$11.2 billion in the first half of 2016, a surge of 105 per cent compared to the same period in 2015.

Meanwhile, in India, Bangalore has consolidated its position as a global tech hub, attracting a range of the world’s leading technology firms, as well as nurturing successful start-ups. This is driving strong real estate demand which, backed by robust levels of rental growth, has propelled it to the top of the index.

However, strong momentum brings challenges as well as opportunities. Cities such as Bangalore and Ho Chi Minh City will need to work hard to absorb rapid growth in the face of increasing strains on infrastructure and rising environmental concerns.

The 134 cities covered by the CMI were assessed using 42 variables including recent and projected changes in city GDP, population, corporate headquarter presence, commercial real estate construction and rents. Other factors included education, innovation and environment.

To learn more about JLL’s CMI, please visit JLL’s Cities Research Centre.