Invest in cities, not countries: TH Real Estate

Investors need to understand local and international long-term structural trends to preserve capital and unlock performance growth in the US, Europe and Asia Pacific, according to TH Real Estate.

The fund manager's head of global research, Alice Breheny, said investors could be missing out on attractive markets, as a lot of economic and real estate advice was given at a country level, instead of at a city level.

Demographic trends that underpinned cities, not countries, were the key to long-term performance, she said. While economic cycles determined short-term performance, megatrends significantly impacted future real estate demand.

Megatrends were defined as urbanisation, the rising middle class, ageing population, technology, and the shift in economic power from the west, all of which had major impacts on the built environment, and significantly impacted future real estate demand, Breheny said.

TH Real Estate's US cities managing director and portfolio manager, Randy Giraldo, said: "The US' recent economic growth has been concentrated in top cities and metropolitan areas which are home to global industry leaders in technology, finance, media, education, and medical sciences".

They became innovation centres and attracted the youngest and brightest employees, he said.

For example, just a few cites in the US were the world's biggest, most resilient and competitive hot spots, while some cities in the Asia-Pacific region were expected to become even more competitive over the next decade, TH Real Estate said.

Meanwhile, some European cities were named as being abundant with innovation, productivity and rich populations.

"The best cities in Europe will grow exponentially and continually have increased demand for real estate, as their charm will ensure they continue to attract both talent and tourists," the fund manager said.