Colliers International’s most influential cities in Europe

The UK capital has topped Colliers International’s top 50 ranking of Europe’s most influential cities for the third year in a row, writes Damian Harrington, head of EMEA research, Colliers International. Which other urban hubs are poised for growth in 2018 and beyond? In 2016 we ran our first Cities of Influence analysis reviewing how key European cities were positioned to thrive in the modern digital age. Not only as bases for the world’s largest companies, but as incubators for up-and-coming tech and commercial giants, and thus as Europe’s most attractive locations for talent, occupiers and investors. In this year’s study, we expanded our coverage to 50 European cities, including a host of diverse urban hubs, ranging from the mega (10m+ population) to small (1m-2m). We also expanded the range of factors and inputs analysed to develop a broader view of the attractiveness of cities to staff in terms of factors driving ‘liveability and affordability’. This increasingly important ‘quality of life’ element was built into the analysis under the umbrella of ‘employee aspirational factors’. This comprised one of eight components alongside more traditional input categories encompassing economic output; productivity and diversification; workforce size/composition; cost and fresh talent; real estate availability and costs; and the ease of doing business. The overall results generated some interesting city rankings – particularly when we compared overall scores with investment volume trends. London came out on top, by far, followed by Paris and Madrid. The top three markets also formed the top three investment markets of 2017, pointing to a strong correlation between long-term occupier strength and investment activity. Munich, Moscow, Birmingham, Milan and Manchester’s appearance in the top 10 points to the importance of critical mass. Eight of the top 10 ranked cities benefit from dominance over their hinterland, in some cases forming ‘super-metros’. Although the analysis was structured to examine the broader, functional catchment areas of each city, Zurich and Edinburgh also scored highly on quality of life/employee aspirational factors and as a result of the high orientation of their workforce towards higher value-added skills. Both have strong university catchments, helping drive their talent pool in a range of technical and scientific roles, alongside their established financial/insurance business services industries. Edinburgh was the only ‘small’ city to make it into the top 10, begging the question: how can other cities combine to form ‘super-regions’ to compete against the ‘super-metros’ dominating the index, and help drive investment? The whole is greater than the sum of its parts The global nature of investor and corporate capital means investors are increasingly looking at ‘super-metros’ and broad economic/metropolitan areas rather than individual cities. We have seen increasing evidence of these regions developing in a bid to attract, retain and embrace global commercial giants, investors and the talent needed to support them. From this it is clear that the European future is going to belong to governments that can energise and galvanise constituent parts into metropolitan regions that have real comparative advantages within the EU and global economy. If a metropolitan region is truly joined up and competitive, it will be on the leading and growing edge of international business, where the young and talented want to be and where multinationals and global investors will make strategically smart and diverse investment. Around 100 global corporate giants account for more than three-fifths of the total R&D expenditure among the world’s top 1,400 companies and are likely to dominate global economic growth in the coming decades. As occupier and investment cycles continue to cool, the regions that can enable these global companies to invest and grow are the locations most likely to outperform the rest. Main image © Design Pics Inc/Rex/Shutterstock A version of this article appears in the October 2018 print edition of the EG Global Investor Guide with the headline “Under the influence” Additional research by Richard Divall, head of crossborder capital markets, EMEA, Colliers International