London Still the Star of Euro Cities
- Oct 08, 2019
London stands atop the latest European Regional Economic Growth Index, released by LaSalle Investment Management. The city took the top spot for the 11th time since 2000 and for the third year in a row. LaSalle’s announcement called London “the continent’s leading market for future real estate occupier demand.”
London’s top ranking is based on an assumption that the United Kingdom will exit the European Union with a deal by March 2020 and remain in a customs union with the E.U. for an extended period. LaSalle specifically noted that a no-deal Brexit would hurt the rankings of the United Kingdom’s cities, “with London most exposed.”
In other commentary, London has drawn both confident praise and some concern. In January, a report from JLL highlighted the city’s position as a destination for capital, much of it from foreign investors. In April, however, after a deadline for Brexit was postponed (to the current month), CRE experts told Commercial Property Executive that both occupiers and investors were seen as cautious and “waiting for a bit more clarity” in the face of political uncertainty.
Simon Marx, LaSalle’s director of research & strategy, pointed out that despite numerous changes over the Index’s history, “London has always held a spot close to the top of the Index.”
“While the outcome of Brexit will clearly have a significant impact on London’s ranking,” he added, “the city has showed tremendous resilience over the last two decades and remains unparalleled in Europe in terms of the scale, flexibility and diversity of its workforce and skills base.”
Paris took second place in the index’s rankings for the third year in a row. Despite its highest score ever, it fell relatively further behind London. Paris was noted as having a positive service employment outlook compared to last year and as leading the LaSalle European Human Capital Index, which is a component of the E-REGI Index.
And in a sign that maybe dicey national governments aren’t a huge barrier to (perceived) economic prospects, Istanbul bumped Stockholm to take third place. The report cited Istanbul’s strong GDP and employment scores and “a large improvement in its employment growth prospects and human capital.”
The best of the rest
The United Kingdom did well overall in this year’s ranking, with almost all U.K. cities improving their places. Manchester overtook Edinburgh to be the second highest-ranked U.K. city. Like Manchester (33rd), Glasgow (51st) and Liverpool (58th) both rose more than 15 places compared to other European cities. Improved service employment outlooks were typically crucial for these shifts. Though Dublin fell three places, it stayed in the top 10, at ninth position.
On the continent, Amsterdam continued its rise and reached 16th place, based on a high concentration of value-added sectors, higher-than-average productivity and a vibrant quality of life that attracts foreign talent and tech startups.
Nordic cities also did well, with Stockholm, Oslo and Copenhagen-Malmö in the top 10. German cities generally weakened slightly in the index because of that nation’s struggling industrial sector and weaker global trade. Only Munich, in fifth place, remained in the top 10. Bucharest, a popular IT outsourcing location, jumped 40 places to 45th.
The E-REGI Index, now in operation for 20 years, scores each European region based on its medium-term economic growth prospects, level of human capital and wealth, and business environment. This year, the service sector was seen as important for London’s positioning, as well as numerous other cities that held or improved their positions.