Expert Market, the US analytical web portal, published its ranking of the best cities to live and work in for IT professionals. They analysed the average income level, the volume of financing available to local startups and the costs of living in different cities around the globe. Tranio experts examine the world’s top five tech hubs, according to Expert Market, to find out how the density per square metre of IT professionals affects property prices.
Beijing tops the list of the best cities for IT professionals to live and work, despite its failure to make the top 10 only two years ago. Beijing is home to 56 Fortune 500 companies, the world’s largest enterprises by revenue. The smartphone manufacturer Xiaomi and the ‘Chinese Google’ Baidu are headquartered in the city.
According to official statistics, IT professionals’ salaries in China are almost twice that of other employees. One of the world’s largest job search websites states that the average income level in Beijing’s IT industry amounts to $25,000 per year. And as a further boon, the cost of living in the Chinese capital is relatively low: The international consumer price database Numbeo ranks Beijing at 277 of 439.
- $25,000 p.a. Average salary in the IT industry
- $900 per month. Rental price for a one-bedroom apartment in the city centre
- $14,800/m². Purchase price for a one-bedroom apartment in the city centre
According to 2016 data from the National Bureau of Statistics, the price per square metre in Beijing was almost four times higher than the Chinese average. The difference was less striking in 2013: real estate was three times more expensive in the capital than nationwide. Property price growth in Beijing is to a greater degree associated with overall economic performance. Since 2010, the city’s population has been increasing by 4-5% annually; income per capita has been increasing, while the city’s GDP in 2016 exceeded the 2011 figure by 1.5 times.
Expert Market ranked Berlin at 2ⁿᵈ to Beijing. The city is known as the European Silicon Valley: over 500 startups open there every year. According to the Berlin Business Location Centre internet portal, in 2018 Berlin’s startups attracted €1.07bn of investment with 40% of it coming from abroad.
The city offers excellent conditions for startups: the cost of living in Germany is generally lower than in Europe while renting and buying residential property is much cheaper than in other major German cities, such as Munich, Frankfurt and Düsseldorf.
- $58,000 p.a. Average salary in the IT industry
- $1,000/month Rental price for a one-bedroom apartment in the city centre
- $6,000/m² Purchase price for a one-bedroom apartment in the city centre
Berlin is one of Germany’s most active real estate markets. Cheap mortgages and an increasing number of inhabitants stimulate residential property growth; the city’s population is growing by 50,000 a year, totalling 3.6mn. This is largely due to young professionals coming from abroad: almost one-fifth of Berlin’s population is foreign-born.
Expert Market ranked San Francisco, home to tech giants Apple, Airbnb, Google, Facebook, Twitter and Uber, at number 3.
In San Francisco, IT professionals have the highest salaries in the world versus any other hub, but they also have to spend more to live there. The average salary is $137,000 per year, according to Glassdoor as of December 2018, but the cost of living in Silicon Valley amounts to $110,000 per annum on average, which is more expensive than anywhere else in the US, Go Banking Rate analysts conclude.
- $137,000 p.a. Average salary in the IT industry
- $3,400/month Rental price for a one-bedroom apartment in the city centre
- $12,500/m² Purchase price for a one-bedroom apartment in the city centre
The affordable property segment in San Francisco is going through a crisis. According to the city’s Planning Department, low and moderate-income buyers can purchase less than a third of the properties built since 1990.
Expert Market ranked Austin in 4ᵗʰ place, and CNBC deemed the Texan city as the best US place to start a business in 2016.
Living in Austin is almost twice cheaper than living in San Francisco: according to Go Banking Rate, a local household spends about $55,000 per annum. This is $3,000 less than the city’s average salary and 80% less than what local IT professionals earn.
- $98,000 p.a. Average salary in the IT industry
- $1,700/month Rental price for a one-bedroom apartment in the city centre
- $4,200/m² Purchase price for a one-bedroom apartment in the city centre
Property prices in Austin are 60% above the national average and have been growing steadily for the past seven years. Local realtors believe this trend will continue in the near future: the influx of new highly paid IT employees guarantees residential property demand, while the market supply remains limited.
Expert Market ranked Tel Aviv at number 5. According to the AT Kearney consulting company, the city is a world leader regarding startup density per square metre.
The main driver for property prices in Tel Aviv is the surging technology sector. This is Israel’s most expensive city; property prices in Tel Aviv are 30% higher than the national average.
- $65,000p.a. Average salary in the IT industry
- $1,200/month Rental price for a one-bedroom apartment in the city centre
- $11,400/m² Purchase price for a one-bedroom apartment in the city centre
The price per square metre in Tel Aviv has declined by 9% in the last year. According to estimates by the Israeli business media outlet Globes, the prices in the city are going to continue decreasing: the international investment flow is declining due to more expensive financing, while the city’s construction volumes are growing.
Which other cities can attract property investors? Cushman & Wakefield, a US company specialising in commercial property, recommends looking at the cities of Eastern Europe and India, which have not yet been recognised as tech hubs but have already started attracting highly paid IT professionals.