Systemic risk associated with international office investment in global cities.
What is it about?
This paper extends arguments set out by Lizieri in Towers of Capital (2009), exploring the relationship between commercial real estate investment, global capital flows and financial crises. The focus is on the inter-relationship between office markets in major world financial centres and global real estate investment strategies.
Why is it important?
The paper sets out a framework for understanding market linkages, based both on the development of global capital markets and on micro-level research into the functioning of office markets. An examination of available global city attribute and inter-city flow data for the advanced producer services and real estate investment sectors provides insights into an inherent spatial contradiction associated with the dual role of real estate in globalization, as a physically fixed commodity, and as a fluid capital asset. A number of implications for city users, investors and policy-makers are identified.