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Will these 5 tech communities cause real estate prices to rise?

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Information technology (IT) is at the centre of the modern economy. Finance, health care, government, manufacturing and a list of other industries depend on IT to operate at a competitive level. Therefore, it's not surprising that tech-focussed cities are appearing across the globe.

As more tech startups come to fruition, many of these businesses will bid for valuable office space at the hub of burgeoning tech communities. Whenever demand for a particular commodity increases and its supply remains stagnant, the price of that resource increases. It's a factor many real estate investors recognise upon conducting property feasibility studies.

Tech jobs in Austin grew almost 74 per cent between 2004 and 2014.

So, where should commercial property developers consider looking? Listed below are five growing tech cities throughout the world that may show promise.

1. Austin, Texas

In 2015, Forbes Magazine conducted a study to determine which US cities were creating the most IT-related jobs. According to the report, the number of tech industry jobs in Austin grew almost 74 per cent between 2004 and 2014. Two years ago, the exact number of tech positions stood at 53,118.

Overall, Austin has successfully attracted those possessing skills associated with science, technology, engineering and math (STEM) credentials. Forbes noted the metropolis provided employment to more than 86,000 STEM workers.

Austin tech startups have received consistent support as well. Built In Austin compared its own data with that from Thomson Reuters, finding that, in 2014, the city's fledgling companies attracted 123 per cent more funding than they did in 2013.

Stockholm is quickly growing as a tech community. Stockholm is quickly growing as a tech community.

2. Stockholm, Sweden

One city that's expanding rapidly, particularly in the IT sector, is Stockholm. Research from Switzerland Global Enterprise noted that Stockholm provided a home to approximately 50 per cent of Sweden's IT workforce, as of 2013.

As a whole, the Scandinavian country has demonstrated immense potential in IT focuses such as mobility, cloud computing, social technologies and big data solutions.

Those interested in developing investment appraisals of Stockholm should take note that Switzerland Global Enterprise regarded Stockholm's residential real estate market as particularly expensive. Between this and a high concentration of tech workers, it's likely that commercial property is also priced competitively. 

3. Tel Aviv, Israel 

According to a report from the Tel Aviv government, 64 per cent of the IT companies in Tel Aviv are startups, alluding to an incredibly competitive environment that may produce some of the most innovative tech businesses in the world. Many of these startups are either solidifying their ideas or are developing their proposed products.

Growth has been consistent in the second decade of the 21st century. The study noted that, between October 2012 and November 2014, Tel Aviv gave birth to nearly 280 startup companies. This represents an expansion of 40 per cent. 

"Tel Aviv has evolved into one of the world's leading hubs for technology and innovation," said Tel Aviv Global Director of Economic Development Yael Weinstein. 

"Home to some of the world's leading academic programs in innovation, engineering and technology-related fields, the Startup City of the Startup Nation provides companies, investors and global enterprises with a multitude of talent, developed infrastructure and business opportunities."

4. Raleigh, North Carolina 

In Forbes' study of cities with growing tech jobs, the magazine named Raleigh, North Carolina as the second-best metropolis for such positions. The number of IT jobs grew 62 per cent between 2004 and 2014, delivering almost 39,000 such positions by the latter year.

Raleigh is a part of what's known in the US as the Research Triangle. The region serves as a home to Duke University, North Carolina State University and the University at Chapel Hill. On average, the location's institutions, contract research companies and government laboratories spend approximately $2 billion each year in research. 

Commercial property may involve more than office complexes, so developers interested in starting projects in the area would do well to consider the prospect of building research and production facilities. 

5. London, UK 

London has always been a draw for real estate investors, as it's one of the busiest cities in the world. Data from Tech City UK also confirmed that it has a rapidly expanding IT community. The company surveyed 47,200 UK-based digital companies, 90 per cent of which expected revenue to grow in 2015.

Tech City UK organised tech communities into regional clusters where startups and IT-focussed businesses were operating. Unsurprisingly, the company named Inner London as the location with the largest number of digital enterprises. 

However, Bristol and Bath are being recognised throughout the world as a tech cluster to which investors should pay attention. In this region, companies noted that potential for expansion is quite great. In addition, Greater Manchester is establishing itself as a digital hub, transitioning away from a media-focussed city metropolis. 

Identifying the right opportunities for real estate investment takes assiduous research, expert insight and the right tools. Estate Master provides a suite of solutions to help developers collate and analyse information. For more information on our software and services, contact us today

Date Published: 15 Feb 2016
Category: General News

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