While established leaders continue to dominate the global innovation ecosystem, competition is growing from smaller, more agile cities, with Asia Pacific cities now featuring prominently in the rankings.
San Francisco might lead Jones Lang LaSalle's ranking of the world's top innovation cities, but seven cities in Asia Pacific feature in the global top 20, with Tokyo and Singapore trailing the global leader closely, according to «Innovation Geographies,» a report by the commercial real estate services firm that ranks global cities in terms of innovation and talent concentration.
Stronger Presence by Asia Pacific
The report noted Asia Pacific's stronger presence in the innovation rankings compared to just a few years ago.
It noted that Tokyo leads the world in patent applications, while Beijing has nurtured the most number of unicorns outside Silicon Valley and is the third-largest destination for venture capital funding.
Talent concentration, however, was dominated by North American and European cities.
Methodology
The study quantified innovation and talent attributes of over 100 cities globally. Measures of innovation included FDI in high-tech industries, international patent applications, venture capital attracted, and R&D expenditure. Talent concentration was measured by the quality of higher education, education level of the population, number of 20–40 year-olds, and employment in high-tech industries.
Cities with similar characteristics were grouped into six categories: Transformers, Talent Rich, Balanced, Emerging Innovators, Innovation Centric, and Global Leaders.
Real Estate Implications
Crucially, the report highlights that innovation attracts real estate investment and boosts real estate performance. The top three city clusters – Global Leaders, Innovation Centric and Talent Rich – account for three-quarters of commercial real estate investment globally.
At the same time, the report notes a strong link between a city’s Innovation and Talent attributes and its rental growth potential, with total returns typically higher in the top three city clusters.
«Innovation ecosystems within cities are key to driving productivity and in turn lead to economic growth and, by implication, to demand for real estate, particularly when combined with a high concentration of human capital,» Carol Hodgson and Matthew McAuley, the report's authors, said.
