With fears of a residential and commercial property crash having receded following last year’s Brexit vote, London is starting to look like the same old safe haven as ever for both domestic and international property investors, illustrated by Colliers International’s new Cities of Influence report.
The outcome of the EU referendum made many nervous that there would see a mass exodus of businesses relocating from London, but so far that has not happened and Collier’s report says that the capital remains, and will continue to remain one of the most influential cities for talent, location and costs, and this will continue to support demand for both residential and commercial property space in the city.
“London may be one of the most expensive cities from a real estate standpoint but when taking all factors into consideration, and the ability of the city to re-invent and evolve, it is superior to all other major European cities in this study,” said Damian Harrington, director head of EMEA research at Colliers International.
Colliers’ Cities of Influence report features a ‘TLC’ index in which 20 major individual economic cities are ranked in terms of talent, location and cost.
These factors have been categorised based on the size and orientation of economic output and the workforce; the capacity and skill-set of the latent and emerging talent pool; the cost and affordability of the city – as a place to live and save, and in terms of the cost of labour and total cost of office occupation; and finally the country risk associated with the market, and the inherent risk/challenges presented by labour laws.
Throughout the analysis, London and Paris hold the top two spots, primarily as a result of their size.
Paris is the leading market when it comes to output/orientation, future skills and capacity and affordability/cost. Paris scores particularly strongly when it comes to the size/experience of the latent talent pool, driven by higher levels of short-term unemployment than those available in London. Yet when it comes to the final results, factoring in market risk, London takes the reins.
The UK’s labour laws are far more relaxed in London than in Paris, which has been a major driver of businesses location decisions in favour of the UK’s capital.
Harrington added: “Recent announcements at the end of 2016 by global tech giants such including Apple, Google, Facebook and IBM re-affirmed their commitment to the future of the London and UK economies.
“With Trumps latest immigration policy, this could be even more reason for talent to move to London. The ability to hold on to its workforce and continue developing its talent base will be critical to ensure the UK’s capital remains a primary attractor of corporate activity.”
Outside of the big two markets, Manchester, Stockholm and Dublin are the three cities which feature most highly at third, fourth and fifth places, respectively.
Madrid and Barcelona both have strong affordability/cost scores, and high latent talent pools, but suffer from a high country/labour market risk factor. This knocks Madrid from third to eighth, and Barcelona from seventh to 16th.
Munich only hit the top five once but cost/affordability and future talent factors prevent it from staying in this position.
The bottom ranking markets features Milan, Budapest and Brussels.
Harrington commented: “With the recent announcement by the UK Prime Minister, that the UK will be seeking a clean exit from the EU single market, and the upcoming elections in the Netherlands, France and Germany, there is clearly a lot of country risk impacting both the UK and the European Union.
“Some occupiers will be more focused or interested in one component over another and thus the overall weightings and scores could change according to these preferences. For example, occupiers driven by cost may see the southern European and CEE markets as more attractive than their northern and western European counterparts. Alternatively, occupiers focused on a digitally sophisticated workforce will be more tempted by Stockholm and Prague than Barcelona or Brussels.”