Human capital will fuel the growth of Berlin鈥檚 real estate sector over the next 10 years, according to a white paper by Investment Management.
The LaSalle European Human Capital Index (LEHCI), released at MIPIM in Cannes, identified cities with a concentration of human capital, or the capacity of the population to drive economic growth through productivity.
Speaking at MIPIM, Mahdi Mokrane, head of European research and strategy, said investors should be 鈥渢ilting their portfolios鈥� to cities higher up the index.
The index, which judged cities on skills, creativity and investments, highlights Berlin as a city set for notable growth over the next 10 years in its human capital stock due to its innovation district.
It also highlighted smaller markets, including Oxford, Cambridge, Lyon and Stuttgart, as well 鈥渆merging sub-markets鈥� in larger cities, such as London鈥檚 East India Dock, Amsterdam Sloterdijk and Paris Quartier du Marais.
Mokrane said: 鈥淭he human capital index ranking shows that the stock of human capital is concentrated in a few locations and that not all big cities are the winners.
鈥淲e鈥檝e found that more diverse centres are likely to innovate and grow more quickly than their smaller counterparts, although there are exceptions such as Oxford, Cambridge, Copenhagen, and Zurich.鈥�
Larger markets that were also ranked highly for human capital but were adjudged 鈥渕ore volatile鈥� include Milan, Madrid and Dublin.
Overall, almost all of French and UK cities studied benefitted, LaSalle said.
Mokrane said a 鈥渨inner鈥檚 curse鈥� had impacted on London, with affordability of accommodation and travel becoming an issue.
While the LEHCI highlights 10-year forward-looking trends, it feeds into the annual LaSalle European Regional Economic Growth Index (E-REGI), which measures five-year trends.
London last year in E-REGI following the country鈥檚 Brexit vote in June.
The uncertainty surrounding the UK鈥檚 future trade relationship with the EU was dampening economic prospects in the country, the firm said in October 鈥� even though London and the rest of the South East remain strong in a European context thanks to a diverse economy and high human capital.
Mokrane said investors are 鈥渨ell-aware of demographic trends, winning cities, and drivers of long-term growth, but certainly human capital has developed from just a theme to detail regarding locations to invest in, assets to lease up, and expanding real estate according to changing human capital forces鈥�.
