Innovation and talent concentration as economic engines

JLL has published a new edition of the „Innovation Geographies” study, which analyses 108 cities worldwide and compares them in terms of economic performance, investments and talent pool.

April 25, 2024

The analysis combines factors that favour innovation and talent, such as the presence of first-class universities, investments in research and patent applications.

The San Francisco Bay Area remains at the forefront of global innovation by a significant margin, outperforming most other regions in terms of venture capital, R&D investment, productivity and breadth of talent. Beijing, Boston, Tokyo, London, Seoul, Singapore, Shanghai, New York and Paris complete the group of the world's leading centres in terms of both innovation output and talent concentration.

While Zurich is in the middle of the pack in terms of innovative strength (#47), it ranks 9th worldwide in terms of the availability of highly qualified labour, having improved by three places since the last evaluation two years ago. According to the study, London (#4), Berlin (#5) and Stockholm (#7) have a higher concentration of talents than Zurich, which is still ranked ahead of Singapore (#11), Munich (#15), Paris (#22) and New York (#24).

1 San Francisco Bay Area 11 San Diego
2 Tokyo 12 Seattle
3 Seoul 13 Austin
4 Boston 14 Shenzhen
5 New York 15 Los Angeles
6 Shanghai 16 Tel Aviv
7 Beijing 17 Munich
8 London 18 Toronto
9 Singapore 19 Berlin
10 Paris 20 Stockholm
Talent Concentration
1 San Francisco Bay Area 11 Singapore
2 Beijing 12 Washington, DC
3 Boston 13 Seattle
4 London 14 Copenhagen
5 Berlin 15 Munich
6 Tokyo 16 Toronto
7 Stockholm 17 Amsterdam
8 Raleih 18 Seoul
9 Zurich 19 Shanghai
10 Austin 20 Brussels

The qualities and high attractiveness of Swiss cities are not only reflected in the JLL study, but also in other surveys. Vienna, for example, leads the „Quality of living city ranking” by Mercer (2023), followed immediately by Zurich in second place. Geneva (#5), Bern (#13) and Basel (#14) are also among the top 20. In the „IMD World Competitiveness Ranking”, which assesses the competitiveness of countries, Switzerland came third in 2023 behind Denmark (#1) and Ireland (#2), followed by Singapore (#4) and the Netherlands (#5) as well as Sweden (#8), the USA (#9), China (#21) and Germany (#22).

Key takeaways of JLL’s study „Innovation Geographies”
  1. Migration to affordable locations: In recent years, talent shortages, rising property prices and regulatory pressures have catalyzed expansion into lower-cost markets, aided by more flexible working patterns and technology. Secondary cities are therefore increasingly competitive with the world's largest innovation hubs.

  2. The hierarchy of innovation hubs is shifting.

  3. Cities that have developed specializations in emerging technologies (e.g. generative artificial intelligence, environmentally friendly buildings, hydrogen, electronic mobility / electric vehicle batteries, so-called "challenger banks", drug development) have a competitive advantage today and in the future.

  4. Geopolitical tensions and trade barriers mean that local research and development hubs will play an increasingly important role.

  5. Partnerships between the public and private sectors will be crucial to the success of urban development projects, as much of the built environment is at risk of becoming obsolete and unable to meet the newer occupier and investor requirements, as well as stricter efficiency and sustainability standards. The speed at which urbanisation is progressing is also increasing the pressure on the public sector.

Implications for real estate markets

Innovation remains a decisive economic factor and driver of property demand, and is not least part of the solution to social challenges such as global warming and demographic change.

The assessment of innovation and talent development in cities is a key aspect in identifying future growth markets. Indicators of innovation capacity and talent will therefore become increasingly important for investment decisions. Both users and investors will base their locations and portfolios on the geographical distribution of qualified talent and hotspots for innovation-driven growth.

The cost of office space and talent is still often higher in cities with a high level of innovation and a promising labour market. However, to ensure (high) returns on investment in the long term, tenants and owners should pay greater attention to price sensitivity.

The increasing connections and interactions between technology companies, knowledge-intensive industries and research organisations play an important role. They influence the demand for commercial property and the design of our cities, thereby also significantly shaping the future of the property landscape.

The third edition of JLL's „Innovation Geographies” analyses developments in 108 cities worldwide. More than 720 million people live in these cities and around 37 million are employed in the high-tech sector. Two indices were created for each city: innovation output (patent generation, foreign direct investment, venture capital funding, start-ups and R&D spending) and talent concentration (educational attainment, high-tech employment, university publications, university presence, working-age population growth, net migration and GDP per capita).

Click on the link to the entire „Innovation Geographies” study by JLL.

„Zurich and Switzerland have an excellent and efficient talent pool. It is important to promote the education system and innovation clusters in order to be able to solve the existing challenges in the best possible way and remain internationally competitive. At the same time, it is essential to limit unnecessary increases in location costs and to create attractive framework conditions for investments.”

Daniel Stocker, Head of Research at JLL Switzerland

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