London has held on to its spot at the top of a closely watched index of European cities as other UK destinations move up the ranks. The capital has once again ranked number one on the 25th edition of the European Cities Growth Index (ECGI), an annual review of demand for property put together by global real estate investment manager La-Salle Investment management.
While London stood out — ranking first again — thanks to its outsized expected total employment growth, Paris was close behind and has the highest ‘human capital’ score of any European city.
In the UK, the Manchester-Liverpool conurbation and Bristol rose by 14 and 4 places respectively to positions 19 and 27, as a result of the projected impact of defence spending.
Elsewhere in Europe, Warsaw moved into the top 10 for the first time since 2010 due to a strong growth outlook, Germany had the most city regions categorised as ‘strong’ and ‘very strong’, at 15, eclipsing the UK’s 12.
Europe head of research and strategy at La Salle, Dan Mahoney, said: “With growing geopolitical tensions, European governments are allocating greater spending for defence, which is expected to create winners in those city regions that have traditionally been the home of military production sites”.
Climate change continued to influence the outlook for European real estate markets, La Salle said. Incorporating climate risk and energy security in its metrics, the index found that the increase in extreme heat days and wild fire is expected to acutely impact southern parts of Europe.
Madrid, however, remained in eighth place in this year’s ECGI ranking, helped by the major economic tailwind of some of Europe’s lowest electricity prices due to solar power, as well as a strong GDP and job growth path.
Mahoney said: “Defence spending and climate adaptation are poised to shape Europe’s urban hierarchy as never before and it’s crucial to incorporate these factors alongside traditional drivers of real estate demand in any city economic league table”.
Apart from Europe, looking at it globally, New York and London retained their positions as first and second place for the global ranking of financial centres, according to the Global Financial Centres Index (GFCI) published this month.
New York has been in pole position since the 24th edition of the index, which was published in September 2018. London has since closed the gap in the ratings, with a single rating point between the two.
This year's edition said the four leading international financial centres, which included Hong Kong and Singapore as third and fourth, are locked in intense competition. Each was separated by only one point on the 1,000-point scale.
The index also showed no change in the top ten centres, with shifts confined to score adjustments rather than ranking positions — San Francisco, Chicago, Los Angeles, Shanghai, Shenzhen and Seoul are unchanged in fifth to tenth positions, it said.
In the top 20 centres, Dubai is up one place to 11th position and Frankfurt down one place to 12th. Tokyo and Zurich entered the top 20, replacing Beijing and Amsterdam.
The rating for almost all centres improved very slightly, with the average rating across all centres up 0.6 per cent. The largest increase in average ratings was in Eastern Europe and Central Asia, at 1.36 per cent and the lowest was in the Middle East & Africa, where average ratings rose by 0.22 per cent.
The 38th edition of the index was jointly published by two leading think-tanks: Z/Yen in the UK and the China Development Institute in Shenzhen. It evaluates the competitiveness of 120 financial centres across the globe in different dimensions.
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