Cities Research Center, 2014
Tokyo on the World Stage
2
Tokyo on the World Stage
Contents
Tokyo on the World Stage
3
City Performance Indices
4
The Shape of Competitiveness
Real Estate Capital Flows
Future Tokyo – The Resurgent City
12
15
21
Appendix
26
JLL
Tokyo on the World Stage
A new commercial geography of cities
Tokyo is a clear ‘Super City’ as the world’s largest urban economy. Momentum is steadily building and the
city has a newfound energy, aided by ‘Abenomics’ policies and lifted by securing the 2020 Olympic Games.
But growth, while important, is only part of what makes a modern city successful. Competitiveness revolves
around a new language of attributes such as liveability, transparency, resilience and global Àuency. Add to this
unprecedented social change and the demand for smart cities, and it is clear that the urban agenda has radically
changed.
Against this backdrop, the evolution of Tokyo and its real estate market over the next decade holds an intriguing
mixture of vast promise and perplexing challenge. Not only are the Olympics set to give a huge boost to the city
and its international reputation, but to meet its own aspirations of improving its world position, Tokyo may have to
absorb a number of signi¿cant changes to its fabric and lifestyle, and even to its personality.
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We are in the midst of an unprecedented urban revolution. There are now in excess of 1,600 major cities1 across
the world housing 2.2 billion people … all jostling for global attention and looking for a winning edge. Competition
between cities for capital, corporations and talent has never been stronger. Over the last decade the combined
forces of globalisation, urbanisation and modernisation have brought many previously unfamiliar cities onto the
world stage and have also propelled four cities into the realm of ‘Super City’ status – 7RN\R1HZ<RUN/RQGRQ
and3DULV – an elite group that possesses a powerful combination of economic scale and inÀuence, deep
corporate bases, highly liquid real estate investment markets and large, diverse and high-quality commercial real
estate stocks.
These four cities wield signi¿cant economic might, particularly in the commercial real estate market, but they
need to remain agile and innovative in order to retain their dominance in a world where global connectivity
and technology is enabling smaller cities to gain rapid momentum and achieve a global position by developing
environments conducive to inventive and creative activity.
3
4
Tokyo on the World Stage
City Performance Indices
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Tokyo’s global competitive position is fundamentally tied to its unique economic scale as the world’s most
populous city, with the largest economy and consumer market. Greater Tokyo’s economy exceeds US$1.4 trillion2
(as large as the economy of Spain) and, with nearly 38 million consumers, its domestic market far exceeds even
that of New York, London and Paris. The city region is also home to more Forbes Global 2000 headquarters than
any other city.
7RN\R·V8QULYDOOHG(FRQRPLF6WDWXV3
Population
GDP
Headquarters
Tokyo
New York
Seoul
Los Angeles
London
Paris
Chicago
Shanghai
Moscow
Beijing
Houston
Washington DC
Dallas
Sao Paulo
Mexico City
San Francisco
Osaka
Buenos Aires
Philadelphia
Hong Kong
Tokyo
Jakarta
Delhi
Manila
Seoul
Shanghai
Mexico City
Sao Paulo
Mumbai
New York
Beijing
Cairo
Dhaka
Karachi
Buenos Aires
Kolkata
Istanbul
Los Angeles
Chongqing
Rio de Janeiro
0
10
20
30
40
Millions
Tokyo
New York
London
Seoul
Paris
Hong Kong
Beijing
Chicago
Taipei
Houston
Mumbai
San Jose
Toronto
Osaka
Sydney
Dallas
Stockholm
Moscow
Shanghai
Washington DC
+ 5-10%
0
500
US$ billions
1.000
1.500
0
50
100
Forbes 2000 HQs
Source: JLL, UN, Oxford Economics, Forbes
7KHZRUOG·VODUJHVWFRPPHUFLDOUHDOHVWDWHPDUNHW
The overall pre-eminence of Tokyo is highlighted in JLL’s 2014 Commercial Attraction Index, which measures a
city’s economic and real estate power and status, based on a basket of variables.4 The Index is distinct in that
it includes key real estate measures (namely investment volumes and commercial real estate stock), as well
as socio-economic and business indicators such as economic output, population, corporate presence and air
connectivity.
Tokyo tops the Index, followed closely by the other three ‘Super Cities’. Several Asian cities such as Shanghai,
Beijing, Hong Kong, Seoul and Singapore are now a permanent feature of the top ranks and provide stiff
competition across a number of individual city attributes.
150
JLL
7RN\RDWWKH7RSRI-//·V&RPPHUFLDO$WWUDFWLRQ,QGH[
Population
Economicc Output
Corp
porate Presence
Connectiivity
Real Estaate Stock
Real Estate Investm
ment
7RN\R
2
New York
3
London
4
Paris
5
Los Angeles
6
Seoul
7
Chicago
8
Shanghai
9
Beijing
10
Washington DC
11
Moscow
12
Hong Kong
13
Atlanta
14
Dallas
15
Singapore
16
Sao Paulo
17
San Francisco
18
Houston
19
Jakarta
20
Toronto
Source: JLL, 2014
5
6
Tokyo on the World Stage
6LJQLÀFDQWVFDOHDGYDQWDJHV
Indices from other leading authorities on city competitiveness paint a similar picture of economic dominance and
the city as a key location for strategic business activity, which is symptomatic of a reorientation of Tokyo’s role in
the global economy. Tokyo’s performance in the Mori Memorial Foundation’s prestigious Global Power City Index
highlights its attraction in terms of market size, economic vitality and human capital. In the AT Kearney Global
Cities Index, which measures global engagement, the city ranks fourth globally. The city also maintains signi¿cant
scale advantages in the size and sophistication of its ¿nancial services sector, highlighted by its performance in
the Z/Yen Global Financial Centres Index.
(FRQRPLF6L]HDQG6WDWXV,QGLFHV5
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*OREDO3RZHU&LW\
$7.HDUQH\
Global Cities
=<HQ
Global Financial Centres
1
London
1
New York
1
New York
2
New York
2
London
2
London
3
Paris
3
Paris
3
Hong Kong
7RN\R
7RN\R
4
Singapore
5
Singapore
5
Hong Kong
5
San Francisco
6
Seoul
6
Los Angeles
6
7RN\R
7
Amsterdam
7
Chicago
7
Zurich
8
Berlin
8
Beijing
8
Seoul
9
Hong Kong
9
Singapore
9
Boston
10
Vienna
10
Washington DC
10
Washington DC
11
Frankfurt
11
Brussels
11
Toronto
12
Zurich
12
Seoul
12
Chicago
13
Sydney
13
Toronto
13
Geneva
14
Beijing
14
Sydney
14
Vancouver
15
Shanghai
15
Madrid
15
Luxembourg
16
Stockholm
16
Vienna
16
Frankfurt
17
Toronto
17
Moscow
17
Dubai
18
Copenhagen
18
Shanghai
18
Montreal
19
Madrid
19
Berlin
19
Abu Dhabi
20
Los Angeles
20
Buenos Aires
20
Shanghai
Source: Mori Memorial Foundation, AT Kearney, Z/Yen
JLL
,QQRYDWLRQOLYHDELOLW\DQGVXVWDLQDELOLW\
Nevertheless, the business of cities is about being competitive across an ever-growing agenda of indicators. The
language of modern city competitiveness is changing and revolves around a broad range of attributes … from
liveability, sustainability and resilience, to transparency, talent and technological depth.
7RN\R
V0RYHPHQWLQ&RPSHWLWLYHQHVV,QGLFHVY
10 places
6 places
5 places
3 places
$
INNOVATION
COST
BRAND
GATEWAY
FUNCTIONS
Source: 2thinknow Innovation Cities; PwC Cities of Opportunity, ICCA
Looking beyond the pure size measures highlights the underlying competitive advantages that Tokyo holds in
relation to its innovation capabilities, creativity, liveability and sustainability credentials:
‡ Tokyo’s high-technology, RD and manufacturing specialisms are key sources of con¿dence and dynamism for
the city. A large pool of technology-focused workers, combined with research-led universities, has translated
into an overall commercial capability that is stronger than London and New York, as highlighted by its top
position in the IESE Cities in Motion Index.6
‡ Globally, the city is widely recognised for its creativity – in a recent survey by Adobe,7 Tokyo was ranked as
the ‘World’s Most Creative City’, acknowledging its contribution and inÀuence to global innovation and youth
culture.
‡ Tokyo sits in 15th position in the 2thinknow Innovation Cities Index8 which, we believe, reÀects an issue in the
translation of creativity into commerce. According to the OECD,9 for example, Tokyo has by far the largest
number of patent applications of any city worldwide, a key measure of a city’s innovation potential. However,
San Francisco, which has half the level of patents, far exceeds Tokyo in terms of tech start-ups.
7
8
Tokyo on the World Stage
‡ A superior infrastructure, enabled by the large investment capability of the city’s Governor and Metropolitan
Government are critical drivers of business productivity and help boost quality of life in the context of a strong
‘life support infrastructure’. Tokyo features in second position behind Copenhagen in Monocle’s leading-edge
Quality of Life Survey.10
‡ The Tokyo Metropolitan Government is a pioneer on environmental issues and has initiated policies on energy
and climate change, which have steered the national agenda. Tokyo ranks second only to Singapore on the
Siemens Asian Green City Index11 as a result of such policies.
,QQRYDWLRQ/LYHDELOLW\DQG6XVWDLQDELOLW\,QGLFHV
WKLQNQRZ
,QQRYDWLRQ&LWLHV
,(6(
Cities in Motion
Monocle
4XDOLW\RI/LIH
Siemens
Asian Green City
1
San Francisco
7RN\R
1
Copenhagen
1
Singapore
2
New York
2
London
7RN\R
7RN\R
3
London
3
New York
3
Melbourne
3
Hong Kong
4
Boston
4
Zurich
4
Stockholm
2VDND
5
Paris
5
Paris
5
Helsinki
5
Seoul
6
Vienna
6
Geneva
6
Vienna
6
Taipei
7
Munich
7
Basel
7
Zurich
7
<RNRKDPD
8
Amsterdam
8
2VDND
8
Munich
8
Bangkok
9
Copenhagen
9
Seoul
9
.\RWR
9
Beijing
10
Seattle
10
Oslo
)XNXRND
10
Delhi
11
Toronto
11
Philadelphia
11
Sydney
11
Guangzhou
12
Seoul
12
Los Angeles
12
Auckland
12
Jakarta
13
Berlin
13
Dallas
13
Hong Kong
13
Kuala Lumpur
14
Los Angeles
14
Copenhagen
14
Berlin
14
Nanjing
7RN\R
15
Eindhoven
15
Vancouver
15
Shanghai
16
Stockholm
16
Amsterdam
16
Singapore
16
Wuhan
17
Sydney
17
Sydney
17
Madrid
17
Bangalore
18
Hamburg
18
Stockholm
18
Paris
18
Hanoi
19
Lyon
19
Chicago
19
Amsterdam
19
Kolkata
20
Hong Kong
20
Baltimore
20
Hamburg
20
Manila
Source: 2thinknow, IESE, Monocle, Siemens
JLL
&KDOOHQJHVEHLQJWDFNOHG
The Indices also, however, bring to the surface areas where Tokyo is challenged. While it clearly excels
in dimensions of scale and power, the city’s position in several other areas is more ambiguous. The ease
of conducting business compares less favourably with the other ‘Super Cities’, exacerbated by a weaker
entrepreneurial environment. Tokyo’s enduring infrastructure and technological strengths appear to need another
cycle of updating to stay world-class; and the city’s brand has weakened in some measures as other Asian cities
offer compelling destination advantages.
Nonetheless, a number of these challenges are already being addressed:
‡ %UDQGLPDJHDQGLQÁXHQFHTokyo has discovered a new con¿dence as a result of securing the ;;;II
Olympic Games. The city will be preparing for 2020 like no other, which will signi¿cantly boost Tokyo’s
international status and pro¿le. Moreover, numerous governmental bodies and initiatives are contributing to
the promotion of the Japanese brand internationally. Of particular note is the ‘Cool Japan’ initiative, supported
by Tokyo’s city international promotion campaigns. This global inÀuence will be further strengthened by the
‘Tokyo Vision 2020’ projects.
‡ ,QIUDVWUXFWXUH Infrastructure development in the build-up to the Olympics will provide legacy both through
the provision of Olympic facilities and through the strengthening of Tokyo’s transportation infrastructure. The
planned transport projects will drive greater mobility within the city, and particularly to the Tokyo Bay Zone,
home of the key Olympic facilities.
‡ 2SHQQHVV A key vision of the Tokyo Metropolitan Government (TMG) is to:
‘Transform Tokyo into a global business centre that attracts human resources, capital
and information from around the world, to further enhance the city’s vitality’.
Yoichi Masuzoe, Governor of Tokyo12
To realise this ambition, the TMG aims to remove both hard and soft barriers to make Tokyo a ‘barrier-free’ city.
This covers a broad range of areas from the removal of language barriers, increasing ease of doing business
with Tokyo’s National Strategic Special Zone, through to the strengthening of the city’s information and
communications infrastructure.
‡ 7RXULVP Tokyo is witnessing a sharp increase in tourism, with foreign visitor numbers to Japan growing at
an annualised rate of 26% to reach record levels.13 A number of factors have come into play – the relaxing
of requirements for tourist visas issued to Chinese and ASEAN nationals, the streamlining of immigration
procedures for overseas visitors, the expansion of low-cost carriers, improving tourism infrastructure and the
depreciation of the yen against other major currencies. The government aims to double foreign visitors by
2020, with initiatives to create ‘Integrated Resorts’ and to legalise casinos.
‡ 5HWDLOUHQDLVVDQFH Tokyo is a globally-renowned shopping city, with one of the largest concentrations of
retail in the world. An improving economic environment, rising retail sales and increasing tourism have revived
retailer interest in the city, with a number of retailers opening Àagship stores.
9
10
Tokyo on the World Stage
Dispelling the myths
Tokyo’s position on key city competitiveness indices also highlights some of the misconceptions of the city as a
place to live and work. The city’s ranking on several ‘liveability’ indices proves that it is possible for citizens to
have the bene¿ts of a large megalopolis without many of the disadvantages of urban decay, crime and pollution:
‡ In terms of air pollution, for example - a pressing concern for most major Asian cities; and one that is affecting
location choices of corporations and expats - Tokyo scores the lowest in the continent.
‡ The Greater Tokyo region also has population densities that are below its regional peers.
‡ A range of cost indices show that Tokyo is no longer among the most expensive locations to do business,
illustrated by benchmark gross rental levels for prime of¿ce assets, which are now signi¿cantly below London
and Hong Kong.
'LVSHOOLQJWKH0\WKVDERXW7RN\R
/HDVWSROOXWHGFLW\LQ$VLD
2QHRIORZHVWSRSXODWLRQGHQVLWLHVLQ$VLD
7RN\R
Kuala Lumpur
3,400
Osaka
27
7RN\R
Singapore
29
Tianjin
5,000
Jakarta
43
Beijing
5,100
Manila
47
Guangzhou
5,300
Chennai
48
Osaka
5,400
Kuala Lumpur
49
Bangkok
6,100
Hong Kong
50
Shanghai
6,200
Bangkok
54
Chengdu
8,100
Seoul
64
Bangalore
8,200
Guangzhou
70
Jakarta
9,600
Shanghai
81
Chennai
9,700
90
Seoul
10,100
101
Singapore
10,500
Chengdu
111
Delhi
11,600
Beijing
121
Kolkata
12,400
Mumbai
132
Manila
14,400
Kolkata
148
Hong Kong
25,700
Delhi
198
Mumbai
32,300
Bangalore
Tianjin
PM10 Concentration
Source: World Heath Organisation
Population/sq km
Source: Demographica
JLL
%HQFKPDUN3ULPH2IÀFH5HQWVLQ0DMRU:RUOG&LWLHV
US$ / sq ft / per year
200
150
100
50
0
Tokyo
(Otemachi /
Marunouchi)
Gross Rents, Q2 2014
Source: JLL, 2014
Singapore
(Raffles Place)
Hong Kong
(Central)
London
(West End)
New York
(Plaza District)
11
12
Tokyo on the World Stage
The Shape of Competitiveness
Competition among cities to attract talent, trade and capital is ¿erce, but unlike the rigid hierarchy of the past,
modern urbanism sees many different routes to success with diverse styles reÀected in cities performing
differentially in certain attributes but equally well overall. How well a city does across these indicators gives it a
competitive shape as shown by the -//&LW\&RPSHWLWLYHQHVV&REZHEV.
For7RN\R and its peer cities, comparator indicators include not just size measures, but also those of connectivity,
corporate presence, education and innovation – as well as real estate activity – so that, when transferred visually
into a competitiveness cobweb, the shape of the cities’ comparative strengths becomes more obvious.
The cobwebs illustrate the typical ‘roundness’ of the four ‘Super Cities’, scoring well across a range of attributes
which has enabled them to excel as large, economically-diverse and internationally-connected cities.
‡ /RQGRQ – One of the world’s most internationally-connected cities, with a strong educational base supporting
its status as a global ¿nancial and services centre and an increasing reputation for innovation, complemented
by a renowned cultural offering.
‡ 1HZ<RUN– A global commercial and cultural centre, with openness and international reach contributing to a
wide diversity of talent and an impressive research base.
‡ 3DULV – Deep RD and technology expertise, strengths in education, and cultural vibrancy have been offset
somewhat in recent years by slower growth and a less open business environment than some of its peer ‘Super
Cities’.
‡ 7RN\R–- One of the world’s largest corporate bases, ¿nancial markets and RD centres, with world-class
infrastructure and educational opportunities, compromised by relatively low levels of market transparency and
openness, indicative of its lower scores on business-friendliness measures.
Tokyo’s regional peer cities are each travelling in speci¿c directions, with differential strengths and weaknesses. In
today’s hierarchy, there are different routes to success:
‡ Shanghai – An emerging contender for ‘Super City’ status, Shanghai is mainland China’s ¿nancial centre with
robust connections to international markets and investment, although this position is hampered by low market
transparency.
‡ %HLMLQJ – A cultural and business destination with expanding banking services and growing educational
possibilities as it seeks to become a services as well as policy and manufacturing hub.
‡ +RQJ.RQJ – One of the world’s largest ¿nancial centres with a diverse skills base and services economy,
Hong Kong has also bene¿ted from its openness and position as a gateway into the wider Chinese market.
‡ Seoul – A strong corporate base with a heavy focus on research and technology has added to Seoul’s status
as one of the world’s ‘smartest’ cities.
‡ Singapore – An emphasis on business-friendliness and its status as a regional hub, bene¿ting from increased
capital Àows to Asia, has propelled Singapore into a global ¿nancial centre and technology research centre.
‡ 6\GQH\ – Its globally important ¿nancial centre and strong knowledge economy are complemented by
internationally-recognised quality of life and high levels of market transparency.
JLL
&LW\&RPSHWLWLYHQHVV&REZHEV
Tokyo
City GDP
Population
Connectivity
Office Rental
Change
Real Estate
Investment Volumes
Corporate
Presence
Investment
Intensity
Patents
Office Stock
Education
Real Estate
Transparency
New York
Paris
Shanghai
Beijing
Hong Kong
Seoul
Singapore
Sydney
Source: JLL, 2014. See Appendix14
London
13
14
Tokyo on the World Stage
JLL
Real Estate Capital Flows
6L]HDQGVFDODELOLW\GRPDWWHU
The Àows of capital into real estate are a key barometer of a city’s health and its attraction as an international
destination, not only for capital but for corporations and talent. Analysis of recent Àows shows a pattern
of domination of the world’s major cities, with just 30 cities accounting for half of total global commercial
real estate investment volumes. In Asia Paci¿c, the top seven cities (Tokyo, Hong Kong, Singapore, Seoul,
Shanghai, Sydney and Beijing) represent close to 60% of regional investment volumes.15
The weight and inÀuence of the ‘Super Cities’ is particularly apparent – with London, New York, Tokyo and
Paris responsible for nearly one-¿fth of global investment volumes. From a real estate investment perspective,
size certainly gives the choice, the liquidity and the variety of product ... factors that are so important to any real
estate investor, hence the overwhelming share of capital into the world’s major business hubs.
7RS&LWLHVDFFRXQWIRURI,QYHVWPHQWLQWR&RPPHUFLDO5HDO(VWDWH
US$ bn
US$ bn
US$ bn
/RQGRQ
97
Shanghai
21
Munich
15
1HZ<RUN
12
San Francisco
23
22
San Jose
14
3
7RN\R
13
Boston
22
%HLMLQJ
3DULV
6\GQH\
24
Atlanta
13
5
Los Angeles
37
15
Dallas
18
25
San Diego
12
6
Chicago
30
16
Seattle
17
26
Frankfurt
12
7
Washington DC
29
17
Toronto
16
27
Denver
11
8
+RQJ.RQJ
18
Houston
16
28
Miami
11
9
Singapore
19
Stockholm
15
29
Phoenix
10
Seoul
20
Moscow
15
30
Berlin
10
Super Cities
Asia Paci¿c Peers
Direct Commercial Property Investment, three-year total volumes, Q2 2011 - Q2 2014
Source: JLL, 2014
15
16
Tokyo on the World Stage
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However, a characteristic of global Àuency is openness and global engagement – and the attraction of crossborder real estate investment is one of the signs of global Àuency. Signi¿cantly, the proportion of cross-border
investment activity (i.e. deals where the purchaser is a non-domestic entity) in Tokyo is notably below the other
three ‘Super Cities’. Tokyo has, as yet, certainly been less open to international money, highlighting signi¿cant
potential for growth and for further engagement with the international investor community.
&URVV%RUGHU5HDO(VWDWH,QYHVWPHQW$FWLYLW\
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/RQGRQ86EQ
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72.<286EQ
3DULV86EQ
6HRXO86EQ
6KDQJKDL86EQ
+RQJ.RQJ86EQ
6\GQH\86EQ
Cross-Border
Domestic
Three years, Q2 2011 – Q2 2014. ‘Cross-Border’ denotes deals where purchasers are non-domestic
Source: JLL, 2014
JLL
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The latent potential in Tokyo’s real estate market is well recognised
by investors across the world and is highlighted in the results
of the JLL City Investment Intensity Index.16 This measures not
just the volume of investment capital but the volume relative to
economic size, i.e. investment intensity, which reveals that Tokyo
is in 30th position.
The reasons for this run from simple weight of domestic funding
and demand through to real and perceived challenges of doing
business in Japan; in particular the lower levels of real estate
transparency compared to Tokyo’s competitors.
-//&LW\,QYHVWPHQW,QWHQVLW\,QGH[
7RWDO5HDO(VWDWH,QYHVWPHQW
DVSURSRUWLRQRI&LW\*'3
1
Oslo
2
Munich
3
London
4
Stockholm
5
Copenhagen
6
Sydney
7
Warsaw
8
Frankfurt
9
Gothenburg
10
Paris
11
Taipei
12
Edinburgh
13
Singapore
14
San Fransicso
15
Hong Kong
16
Zurich
21
New York
7RN\R
Three-year rolling total direct real estate investment volumes to Q2 2014
Source: JLL, 2014
17
Tokyo on the World Stage
5HDO(VWDWH7UDQVSDUHQF\DQG&LW\,QYHVWPHQW,QWHQVLW\
18%
Oslo
16%
R = 0.48
London
14%
City Investment Intensity
18
Stockholm
Copenhagen
Warsaw
12%
Taipei
Frankfurt
Singapore
10%
Sydney
Paris
Toronto
8%
Washington DC
Zurich
Hong Kong
Berlin
TOKYO
New York
6%
Amsterdam
4%
Prague
Helsinki
Rome
Brussels
OSAKA Rio de Janeiro
Madrid
Kuala Lumpur
2%
0%
1
Ho Chi Minh City
Shanghai
Dublin
2
Moscow
Beijing
Seoul
Bangkok
Mumbai Dubai
Sao Paulo Istanbul
Jakarta
Delhi
3
Macau
Doha
Real Estate Transparency
City Investment Intensity; three-year (rolling Q2 2011- Q2 2014) total real estate investment volumes as proportion of city GDP.
Real Estate Transparency at a National Level
Source: JLL Global Real Estate Transparency Index, 2014; JLL City Investment Intensity Index, 2014
Riyadh
4
JLL
7RN\R·VWUDQVSDUHQF\FKDOOHQJHV
JLL’s Global Real Estate Transparency Index17 places Tokyo in 26th position globally, towards the lower end of the
‘Transparent’ category, with levels similar to Kuala Lumpur, Budapest and Prague.
This reÀects Japan’s traditional real estate practices and for Tokyo to ful¿l the exacting modernisation tasks it has
set itself, the city will require improvement in several key areas.
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Transactions Reporting
Full disclosure from large real estate
owners of transaction pricing, which
can be fully accessed by the public
6HUYLFH&KDUJHV
$
Greater visibility of service charges
and building operating costs for
occupiers – to enhance business
and building ef¿ciency
0DUNHW7UDFNLQJ
Industry tracking of market
fundamentals data – notably in the
retail, industrial and hotels sectors
Source: JLL, 2014
*UHHQ%XLOGLQJV
Indices to measure the ¿nancial
performance of green buildings
Greater adoption of energy
benchmarking systems for
real estate
5HJXODWRU\2YHUVLJKW
A real estate regulatory authority
to oversee and fast-track
improvements
19
20
Tokyo on the World Stage
:RUOG·V0RVW7UDQVSDUHQW5HDO(VWDWH0DUNHWV
Category
Highly Transparent
Transparent
&RPSRVLWH5DQN
0DUNHW
&RPSRVLWH6FRUH
1
London
1.25
2
New York
1.34
3
Sydney
1.36
4
Auckland
1.44
5
Paris
1.52
6
Toronto
1.52
7
Amsterdam
1.57
8
Dublin
1.62
9
Helsinki
1.69
10
Zurich
1.73
11
Stockholm
1.79
12
Frankfurt
1.79
13
Singapore
1.81
14
Hong Kong
1.87
15
Brussels
1.92
16
Copenhagen
1.96
17
Warsaw
2.02
18
Madrid
2.05
19
Oslo
2.07
20
Johannesburg
2.09
21
Vienna
2.10
22
Milan
2.10
23
Lisbon
2.18
24
Prague
2.20
25
Budapest
2.21
7RN\R
27
Kuala Lumpur
2.27
28
Sao Paulo
2.44
Main commercial city in each country
Source: JLL Global Real Estate Transparency Index, 2014
JLL
Future Tokyo –
The Resurgent City
7RN\R·V9LVLRQWR
In order to maintain its top position, Tokyo will need to
continually adapt to the future trends that are rippling across
its landscapes – particularly relating to ‘smartness’, business
friendliness, sustainability, and physical and economic resilience;
requirements well recognised in the Tokyo Metropolitan
Government’s 2020 Vision and Future City initiatives. Core
themes for the revitalisation of the city are being implemented,
partly through 12 key projects (see below) including retro¿tting
buildings, creating a smart city, upgrading infrastructure
and creating power redundancy, as well as attracting Asian
headquarters and major global sporting events and conferences.
7RN\R
V9LVLRQ.H\3URMHFWV
100% Completion of Seismic Retro¿tting
Increasing Fire-Resistance of Districts with
Close-Set Wooden Houses
3
Mutual Assistance for Disaster Mitigation
3 million kW Made-in-Tokyo Power Generation
5
Creating a Smart City
6
Building a Network of Water and Greenery
7
Bolstering the Land, Sea and Air Transport Network
8
Asian Headquarters in Tokyo
9
Bolstering Tokyo’s Child Day-Care System
Active Participation in Society by Senior Citizens
Let Your Child Experience the World
Build Four Big Sports Clusters
Source: Tokyo Metropolitan Government
21
22
Tokyo on the World Stage
6SHFLDO(FRQRPLF=RQHVWRHQKDQFHEXVLQHVVFRPSHWLWLYHQHVV
Various initiatives to improve Tokyo’s business environment and increase the city’s business openness are being
developed as part of the national Special Economic Zones programmes. The bene¿ts of the zones will include
various incentives (e.g. taxes, subsidies), deregulation measures (e.g. faster immigration processes and reduction
of investment procedures) and business and living support (such as information in multiple languages).
1DWLRQDO6WUDWHJLF
Special Zone
Special Zone for Asian
+HDGTXDUWHUV
The zone (which includes nine central wards
in Tokyo) is intended to increase international
competitiveness and create centres of
economic activity to drive through structural
reform of the economic system. It aims to
create a new business base that attracts
money, people and businesses globally
and stimulates the growth of home-grown
internationally competitive start-ups. It
also addresses the Tokyo Metropolitan
Government’s vision of making Tokyo the most
business-friendly environment in the world in
the run-up to the 2020 Olympic Games.
This zone (located in the central
Tokyo and waterfront areas) aims to
attract Asian regional headquarters
and RD centres, and by doing
so to raise Tokyo’s international
competitiveness. The 2016 target
is to have at least 500 foreign
companies located in the zone, 50
of which are to be Asian regional
headquarters or RD centres.
¶)XWXUHSURRÀQJ·IRUVXFFHVV
Future success is also about actively leveraging the speed of change, building and exploiting momentum, and
being able to adapt to change. In order to capture cities that are successfully transforming, JLL has produced its
City Momentum Index18 which tracks the speed of change. Covering the Top 111 major established and emerging
business hubs across the globe, the Index measures each city’s short-term socio-economic and real estate
momentum, and also combines measures of ‘future-proo¿ng’ – whether a city has the essential ingredients to
ensure longer-term sustainable momentum in terms of education, innovation and sustainability.
JLL
7KHFLW\·VQHZIRXQGHQHUJ\
Tokyo sits comfortably among the top performers in JLL’s City Momentum Index, grouped among the
‘Resurgent Cities’ as a result of the city’s newfound energy, which has been aided by ‘Abenomics’ policies and
boosted by securing the 2020 Olympics. Moreover, the city has many of the high-value incubators necessary
for longer-term success – factors such as a world-class higher education infrastructure, an outstanding
research base and a strong innovation economy.
-//&LW\0RPHQWXP,QGH[²0RPHQWXP%XLOGVLQ7RN\R
6KRUWWHUP0RPHQWXP
+LJK7HFK+XEV
San Francisco, San Jose
Austin, Boston, Seoul
Toronto, Munich
Global Gateways
London, New York
Hong Kong, Singapore
Los Angeles
Resurgent Cities
7RN\R
%5,&8UEDQLVHUV
Shanghai, Beijing
Wuhan, Chengdu, Tianjin
Shenzhen, Guangzhou
Mumbai, Delhi
Source: JLL, 2014
Dubai, Dublin
%H\RQGWKH%5,&V
Lima, Jakarta, Bogota
Manila, Bangkok
/RQJWHUP0RPHQWXP
Incubator Cities
Paris, Berlin, Chicago
Amsterdam
Copenhagen, Sydney
23
24
Tokyo on the World Stage
$QLQFUHDVLQJO\G\QDPLFUHDOHVWDWHPDUNHW
Tokyo’s economic momentum is reÀected in its real estate dynamics. Tokyo’s of¿ce market is expected to record
one of the fastest rates of value growth in 2015 (following a robust 2014), putting the city back on track to again
compete with London and New York as the world’s most active commercial real estate investment market.
3URMHFWHG9DOXH*URZWKIRU3ULPH2IÀFHVLQ
Rental Values
Capital Values
7RN\R
Beijing
7RN\R
Beijing
London*, New York*, San Francisco
Sydney, Los Angeles, Chicago
London*, New York*, San Francisco
Sydney, Los Angeles, Chicago
Madrid, Seoul
Hong Kong, Singapore
Paris*, Madrid, Seoul
Mumbai, Shanghai
Frankfurt, Washington DC
Paris*, Washington DC
Mumbai, Frankfurt
Singapore, Shanghai, Hong Kong
Sao Paulo
Sao Paulo
Moscow
Moscow
*New York – Midtown, London – West End, Paris - CBD. Nominal rates in local currency
Source: JLL, October 2014
JLL
25
7KHUROHRIUHDOHVWDWHLQ7RN\R·VIXWXUHVXFFHVV
The future health of Tokyo relies on the city refreshing its global
reputation and addressing the constraints on international business
activity … and the real estate industry has an essential role to play:
‡ by improving real estate transparency, an essential ingredient of
a globally Àuent city, which will support business ef¿ciency and
help attract global corporations;
‡ by creating the style of commercial real estate stock that
will enable Tokyo to grow into its ‘new skin’ and that reÀects
changing attitudes to work, even if this means short-term
market disequilibrium;
‡ by doing more on the ‘green building’ front, which not only
makes sense environmentally, but will increasingly be a key
selling point for investors and corporate occupiers; and
‡ by contributing to Tokyo’s international pro¿le and brand through
state-of-the-art urban design and business practices.
7RN\R²WKHUHVXUJHQWFLW\
Tokyo has created a new web of policies and approaches that
recognise and seek to act where existing attributes require
strengthening and where weak spots need addressing. The
vibrancy of the city’s real estate market will help push
improvement and be a happy recipient of change. JLL looks
forward to helping Tokyo achieve its global ambition.
26
Tokyo on the World Stage
Appendix - Footnotes
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
UN, World Urbanization Prospects, 2014. Cities with over 300,000 population.
JLL’s estimate of total GDP (in Purchasing Power Parity terms) for the Greater Tokyo area (as de¿ned by the UN) with a population
of 37.8 million people.
Data relates to the urban agglomeration of each city as de¿ned by the UN or national statistical of¿ces.
JLL’s Commercial Attraction Index is based on the weighted score of six indicators – population of a city’s urban agglomeration,
estimated GDP (PPP) of a city’s urban agglomeration, a measure of a city’s corporate presence (HQs and revenues of Forbes
2000), combined air passengers of a city’s airports, current of¿ce stock estimates and commercial real estate investment volumes
(over the past three years).
Mori Memorial Foundation Global Power City Index, October 2014. Institute for Urban Strategies of the Mori Memorial Foundation.
Report covers 40 cities.
AT Kearney Global Cities Index, 2014. Published by AT Kearney. The report covers 84 cities.
Z/Yen Global Financial Centres Index, September 2014. Published by Long Finance within Z/Yen, under the ‘Financial Centre
Futures’ programmes sponsored by Qatar Financial Centre Authority and the City of London Corporation. Report covers 83
¿nancial centres.
IESE Cities in Motion Index, 2014. Published by IESE Business School in partnership with Telefonica, BBVA, Ferrovial, Schneider
Electric and Arqtel, and in collaboration with Smart City Expo World Congress. Report covers 135 cities. Measures the future
sustainability of cities and their inhabitants.
The State of Create Report, Adobe, 2012.
2thinknow Innovation Cities Index, 2014. Published by 2thinknow, under the ‘Innovation Cities Program’. Report covers 445 cities. It
measures the cities’ potential as an innovation economy (cultural assets, infrastructure and network connectivity).
OECD Metropolitan Database, whose patent data is primarily drawn from the EPO Worldwide Patent Statistical Database.
Monocle Quality of Life Survey, July/August 2014. Published by Monocle Magazine Issue 75, Volume 8. The report includes the
Top 25 most liveable cities in the world.
Siemens Asian Green City Index, Spring 2011. Published by the Economist Intelligence Unit (EIU); sponsored by Siemens. Report
covers 22 major Asian cities.
Governor of Tokyo, Yoichi Masuzoe’s Policy Speech at the Second Regular Session of the Tokyo Metropolitan Assembly, 2014.
Number of foreign visitors, year to August 2014 v 2013. Source: JNTO (Japan National Tourism Organization).
JLL City Competitiveness Cobwebs.
The JLL City Cobwebs provide a visual representation of the economic and real estate climate across the Global Top 100 Cities.
Each City Cobweb is created from the 11 sets of variables detailed below. The position of a city for each variable is based on the
percentage of the maximum value for the Top 100 cities.
Indicators:
City GDP – latest estimate of the total annual output (GDP) of a city’s metropolitan area
Of¿ce Rental Change – latest annual percentage change in rents for prime of¿ce assets
Real Estate Investment Volumes – US$ value of direct commercial real estate investment over a three-year period
Investment Intensity – direct commercial real estate investment as a proportion of city GDP
Of¿ce Stock – volume in square metres of the total of¿ce stock of the city
Real Estate Transparency – score of the level of real estate transparency at a country level derived from JLL’s Global Real Estate
Transparency Index
Education – score based on the presence (number and quality) of top-ranked universities in a metropolitan area
Patents – latest annual number of PCT (Patent Cooperation Treaty) patent applications from a metropolitan area
Corporate Presence – score based on the presence (number and revenue) of the Forbes Global 2000 companies
Connectivity – total number of air passengers passing through a city’s airports (Source: ACI)
Population – latest population of a city’s metropolitan region
JLL monitors direct commercial real estate investment transactions over US$5 million in the of¿ces, retail, industrial, hotels and
mixed-use sectors. Development deals and residential are excluded.
JLL City Investment Intensity Index is derived from direct commercial real estate investment volumes (over a three-year period) as a
proportion of the GDP (PPP) of a city’s urban agglomeration. Tokyo’s score is based on the Tokyo Metropolis.
JLL’s Global Real Estate Transparency Index, 2014, measures ¿ve components of real estate transparency – performance
measurement, market fundamentals data, listed vehicles’ governance, legal and regulatory, and transaction processes. The Index
covers 102 markets. A lower composite score indicates higher transparency.
JLL’s City Momentum Index (2014) covers 111 cities. The Index is derived from the weighted score of socio-economic momentum
(change in population, GDP, air connectivity, corporate HQs, FDI), real estate momentum (change in occupational demand,
construction, price movement – of¿ces and retail, investment volumes, transparency) and long-term incubators (university
excellence, tech start-ups, innovation capacity).
JLL
For more information on JLL’s Cities Research, visit:
www.jll.com/cities-research
([SORUHDQG&RPSDUH&LWLHV
Our City Comparison Toolkit will help you visualize the position of individual cities and compare one city against another.
27
JLL Cities Research Contacts
Rosemary Feenan
Global Research, JLL
[email protected]
-HUHP\.HOO\
Global Research, JLL
[email protected]
JLL Tokyo Contacts
7RVKLQREX.DVDL
Managing Director/Country Head, Japan
[email protected]
7DNHVKL$NDJL
Head of Research, Japan
[email protected]
JLL Regional Headquarters
Chicago
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.DQVDL%UDQFK
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-DSDQ+HDGTXDUWHUV
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Japan
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)XNXRND2IÀFH
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COPYRIGHT © JONES LANG LASALLE IP, INC. 2014.
This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed, which are inherently unpredictable. It has been
based on sources we believe to be reliable, but we have not independently veri¿ed those sources and we do not guarantee that the information in the report is accurate or complete. Any views
expressed in the report reÀect our judgment at this date and are subject to change without notice. Statements that are forward-looking involve known and unknown risks and uncertainties that may
cause future realities to be materially different from those implied by such forward-looking statements. Advice we give to clients in particular situations may differ from the views expressed in this
report. No investment or other business decisions should be made based solely on the views expressed in this report