London has overtaken Hong Kong to be ranked second in the latest Schroders Global Cities 30 Index for investment, despite the economic and political uncertainty in the UK, especially surrounding Brexit.
The ranking goes some way toward reinforcing London’s position as a significant contributor to the UK economy and highlights the UK capital’s attraction as a location for investing.
London remains the highest-positioned European city in the top 30, followed by Paris in 17th place and new entrant Munich in 28th. In 2016 London was ranked eighth before improving to third place in 2017. The city remains resilient due to positive revisions to employment data, which feed into income growth, a key component of the index.
Los Angeles remains in top spot with Boston and New York making up the top five in the index.
The strength in US cities’ ranking is also underpinned by good employment data: the fall in jobless claims and move to virtual full employment in the US has had a positive impact on the rankings, despite negative headlines around US-China trade relations.
Austin, Texas joins Munich in entering the top 30 for the first time this year, reflecting both cities’ status as growing knowledge-based economies.
The Schroders Global Cities 30 Index is compiled according to a range of factors, including the projected growth of the economy, disposable incomes over the next decade and the size of the population.
Hugo Machin, co-head of global real estate securities at Schroders, says in a statement: ‘We produce the Schroders Global Cities 30 Index each year to give us an edge in tracking the most successful cities of the future. We believe certain factors lay the foundations for upcoming economic growth. As investors, an understanding of these trends is an essential part of our process.
‘Urbanization in China continues at a rapid pace. We see the growth in certain Chinese cities as having a meaningful impact on the future of the global economy. Beijing, Shanghai and Shenzhen will, in our view, draw further away from other cities in China. There is a clear reason for this: the government investment in those three cities results in the formation of ‘mega-cities’, which creates super-economic hubs allowing the proliferation of ideas and jobs.
‘We remain upbeat about London’s prospects. London has unmatched attractions, from green spaces to a vibrant cultural and entertainment scene. People want to live and work there, which means London can attract the world’s most skilled employees. London, like a number of other true global cities, remains at the center of the global economy despite challenges surrounding Brexit.
‘Large cities with broad economies rank well in the index, as scale remains an important part of the analysis. Marrying idea generation to the scale of a city is why certain cities score consistently well and why they are attractive for investing in real assets for the long term.’