MSCI has questioned the “conventional wisdom” that investing in “global gateway” office markets like London, New York and Tokyo leads to superior returns.

In new research released tomorrow, it says that over the past decade international property investors have turned to global gateway cities to provide diversification, capital appreciation and stable cash flows.

But the report – Global Gateway Cities: The Performance Behind The Hype – shows that other office markets can provide more stable income returns.

While global gateways provided higher capital growth over the past decade, MSCI found that regional gateway cities, such as Los Angeles, San Francisco, Amsterdam, Milan, Seoul and Sydney generated higher income returns.

This also applied to many capital cities of small European economies and capitals of small or emerging markets in Asia-Pacific.

However, when adjusting returns for country effects, such as interest rates and economic conditions, global gateways were concentrated in the top half of performers.

But they also displayed higher volatility than their national averages, while smaller cities provided more stable returns with lower capital growth.

“Global Gateway cities clearly were not stand-out performers in terms of total return during our sample period, contradicting initial expectations,” the report says.

“Focusing on London, where a wealth of detailed data is available, we found little support for the perceived wisdom that GGC have more secure and durable income streams than other classes of cities.”