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RESEARCH • 13 Dec 2017
London tops new index ranking Europe's most dynamic cities
Savills IM’s Dynamic Cities index comprehensively measure European cities’ future-proofing qualities across 6 categories
Savills Investment Management (Savills IM) has identified London, Paris, Cambridge, Amsterdam and Berlin as the top 5 ‘dynamic cities’ in Europe. The Dynamic Cities index (http://dynamiccities.savillsim.com/) highlights European cities with sound fundamentals, including strong economic growth, wealth, technology and population trends, which are well placed to take advantage of trends such as urbanisation, the developing knowledge economy and technological change.
Using 60 indicators across 6 subcategories (Innovation, Inspiration, Inclusion, Interconnection, Investment and Infrastructure), Dynamic Cities analyses and ranks 130 European cities. The index provides a score for each city out of 100, with the overall score encompassing the balance of performance across all subcategories.
London tops list despite Brexit worries - Paris, Cambridge, Amsterdam and Berlin complete Europe’s top 5
The report concludes that London’s position atop the index comes down to its range of knowledge-based industries, infrastructure investment, population growth forecasts and diversified workforce, and predicts that London will remain the pre-eminent European city despite short-term turbulence because of Brexit.
Northern European cities dominate the top 10, with Munich (6th), Dublin (7th), Stockholm (8th), Edinburgh (9th) and Zurich (10th) completing the list. Madrid (11th) was the highest-ranked Southern European city, while Barcelona (17th), Rome (32nd), Milan (34th) and Istanbul (39th) also featuring in the top 40.
The top performing Dynamic Cities have ambitious infrastructure investment projects, fast-growing knowledge networks, high-quality universities, innovative businesses drawing from a global talent pool and strong cultural amenities to help retain that talent. Savills IM Dynamic Cities predicts that all commercial real estate sectors will benefit from these characteristics over the long run, with rising employment helping support the office sector; wealth creation benefitting consumer expenditure and the retail sector; and the explosive growth in e-commerce and last-mile delivery driving demand in the industrial sector demand through urban logistics and warehouse facilities.
Europe’s most dynamic cities are future-proofing themselves by creating environments that encourage the growth of a ‘knowledge economy,’ which will increasingly drive wealth creation. The report shows that size isn’t everything: while some ‘supercities’ such as London and Paris are consolidating their already dominant positions, smaller cities such as Cambridge, Edinburgh, Dublin and Stockholm are well positioned to grow in influence over the coming years and are likely to become increasingly attractive locations for property investment.
London
In addition to being the top ranked city overall, London holds the lead spot within the Innovation, Interconnection, Infrastructure and Investment subcategories. London’s strong human capital is forecast to continue to expand, supported by initiatives such as the ambitious London Infrastructure Plan 2050, which involves over £1 trillion of investment covering housing, transport, digital infrastructure and basic services. Although London office supply is increasing and the Square Mile is at some short-term risk, strong wealth indicators and healthy population growth forecasts provide it with a strong long-term investment foundation. London also has a well-diversified workforce, so the overall impact on employment is expected to be small.
Paris
In 2nd place, Paris is one of the most liquid investment markets in Europe, second only to London, with a diverse international investor base. It ranks 2nd on Infrastructure, Interconnection and Investment, and 3rd on Innovation. The French capital’s real estate markets will be shaped to a large extent by the Grand Paris urban development project, while the planned development of industry clusters and the improvement of the public traffic system will offer new investment opportunities.
Cambridge
A perhaps surprising 3rd overall for what is the smallest city ranked in the top 5, Cambridge houses the largest technology cluster in Europe and is supported by world-renowned Cambridge University. It is the top-ranked city for Inspiration and Inclusion, and 2nd for Innovation. It is home to more than 4,300 knowledge-intensive firms, employing 58,000 people and generating more than £11 billion in revenue. Employment grew by 31% over the last 10 years, and this growth is expected to continue. Intense pressures on housing are easing, with a forecast average of more than 2,000 completed each year.
Amsterdam
In 4th place, Amsterdam is one the largest and most densely populated metro regions in Europe. With a thriving tech and start-up community, Amsterdam also ranks 4th for Innovation. Many domestic and international corporations are either headquartered or have large branches there (e.g. BCG, KPMG, Philips, ING, ABN AMRO, Heineken, AkzoNobel). Due to the city’s size, seaport and international Schiphol airport, Amsterdam is also a major national and international distribution hub, ranking 6th for Interconnection. Amsterdam is expected to outpace all other Dutch cities or regions in terms of population and GDP growth (by 0.7% and 1.6%, respectively), over the next decade.
Berlin
Following German reunification, 5th-placed Berlin continues to attract younger generations, in particular due to its globally renowned universities, comparatively low cost of living, creative and cooperative working environment and cultural diversity. The more recent high-tech and service-sector boom has led to dynamic economic growth associated with a notable decrease in unemployment. Scoring 3rd place on Interconnection, Berlin’s economy is now based on a diverse range of interconnected industries, including research and development, pharmaceuticals, biotechnology and construction. Berlin’s population is forecast to grow 8% by 2030, and average GDP growth is forecast at almost 2% per annum until 2030.
Please visit http://dynamiccities.savillsim.com/ for more information.
