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Real Estate Investments in 18-hour Cities: Do 18-hour cities offer better investments than 24-hour cities?
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management.
2016 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesisAlternative title
Fastighetsinvesteringar i 18-timmarsstäder: Erbjuder 18-timmarsstäder bättre investeringsmöjligheter än 24-timmarsstäder? (Swedish)
Abstract [en]

With the rise of the millennial generation, a new roster of cities has sprung to life – the 18-hour cities. They can be defined as a vibrant second-tier city where there’s a big potential for employment and economic growth and at the same time they offer a lower cost of living and doing business than in 24-hour gateway cities like New York City or San Francisco. They have been named the hottest places for real estate investments by industry literature which poses the question if 18-hour cities really offer better investments than 24-hour cities. This paper uses a statistical analysis framework complemented with qualitative interviews of industry professionals based in 18-hour markets to test this notion.

From the statistical analysis, it has been found that 18-hour cities offer higher yields than the 24-hour markets but the cash return cannot be said do differ between the two. Furthermore, the interviews with industry professionals indicate that the 18-hour markets have major future growth prospects because of their job growth, population growth and the large in-migration of high-skilled labor gravitating towards these amenity-rich areas where they can receive the highest reward-for-skill

Abstract [sv]

Med millenniegenerationens framfart har en ny rad städer vaknat till liv – 18-timmarsstäderna. De kan definieras som en levande andrastad där det finns stor potential för arbete och ekonomisk tillväxt samtidigt som de erbjuder lägre levnadskostnad och kostnad för att driva företag än 24-timmarsstäder som New York eller San Francisco. De har utsetts till de hetaste marknaderna för fastighetsinvesteringar av tidsskrifter vilket väcker frågan om 18-timmarsstäder verkligen erbjuder bättre investeringsmöjligheter än 24-timmarsstäder. Denna studie använder statistisk analys kompletterat med intervjuer av personer verksamma i fastighetsbranschen för att testa den hypotesen.

Från den statistiska analysen fanns det att 18-timmarsstäder erbjuder högre direktavkastning än 24-timmarsstäder men avkastningen på kapital kan inte säga skiljas mellan de två klustren. Vidare indikerade intervjuerna med branschfolk att 18-timmarsstäder har stor framtida tillväxtpotential tack vare stark jobbtillväxt, befolkningsökning och stor inflyttning av högutbildad arbetskraft som drar sig till områden med mycket bekvämligheter och där de kan få bäst belöning för sin utbildningsnivå.

Place, publisher, year, edition, pages
2016. , 69 p.
Keyword [en]
18-hour city, 24-hour city, Capitalization rate, 18-timmarsstäder, 24-timmarsstäder, direktavkastning
National Category
Engineering and Technology
Identifiers
URN: urn:nbn:se:kth:diva-190132Archive number: 429OAI: oai:DiVA.org:kth-190132DiVA: diva2:951660
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Available from: 2016-08-09 Created: 2016-08-09 Last updated: 2016-08-09Bibliographically approved

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