Los Angeles has been named as the top global city for investment in the latest index, just beating London into second place with Boston third, Chicago fourth and New York fifth.

American cities dominate the Schroders Global Cities 30 index, taking 18 places with Los Angeles up from sixth place to first, whilst Boston saw one of the biggest leaps in the index going from 24th place to third place.

Chicago jumped from 10th place to fourth, whilst New York, the most populous city in the United States, held onto its fifth place in the ranking, which is compiled on a range of factors, including the projected growth of the economy, disposable incomes over the next decade and the size of the population.

The latest version of the index includes an additional new factor which looks at university ranks, which was the main driver of whether a city moved up or down in its ranking.

Having previously dominated the index, the Chinese mega cities saw some of the biggest falls. Beijing, which took the top spot in December fell to 11th place, whilst Shanghai fell from second to 10th and Shenzhen dropped from third to 24th place.

London was the top ranked European city up six places to second while Paris, which was the only other European city to feature in the index, fell from 12th place to 16th.

According to Hugo Machin, co-head of Global Real Estate Securities at Schroders, it is no surprise that the cities that have benefitted from the inclusion of the university rank are on the West Coast of the US.

He explained that universities are critical in powering city economies as innovation and education provide a better trained, more productive workforce. Knowledge based hubs are growing in economic strength with a positive knock-on to real estate markets in those locations.

The index report says that the scale and economic depth of Los Angeles makes it a compelling location to work and live. One of the key strengths of LA’s economy is that it is well diversified across multiple industries including financial services, media, trade and technology.

The report points out that in Los Angeles the technology sector, in particular, has grown substantially over the past few years, and this has not only boosted demand for office space but also for residential property, much of it due to the increased hiring of millennials.

Chinese cities still rank extremely well with Shanghai and Beijing in the top 10. Shenzen, despite emerging as a knowledge base economy, does not have the tertiary education that ranks as highly as the two more established Chinese cities.

‘We maintain that London has a competitive advantage in location, language, scale, infrastructure and cultural diversity. If we add the global strength of its universities, London remains a favoured place to invest,’ Machin explained.