Europe s Most Dynamic Cities. City Momentum Index March 2015

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1 Europe s Most Dynamic Cities City Momentum Index March 2015

2 Europe s most dynamic cities The combined forces of urbanisation, globalisation and technology are recasting the commercial geography of real estate offering new opportunities and challenges in a fast-changing global hierarchy of cities. The world s most competitive cities are those that are quick to adapt to each new cycle of global change and that are building forward momentum. In order to capture cities that are successfully transforming, JLL has produced an annual City Momentum Index (CMI) which tracks a city s short-term socio-economic and real estate momentum, in combination with measures of the longer-term foundations for future success. The 2015 CMI covers 120 major established and emerging business hubs around the world. Our global report >>, launched in January, highlights those cities where change is occurring most rapidly. Noticeable by their absence from the Global Top20 are continental European cities, with only two European cities and Dublin represented in the top group. But a look beyond the Global Top20, to the European Top12 the best performing cities in Europe reveals that despite Europe s structural challenges, there are significant pockets of dynamism and opportunity. JLL City Momentum Index 2015 European Top12 Economy Connectivity Corporate Activity Construction Property Prices Real Estate Investment Technology Environment Education R&D Dublin Munich Copenhagen Stockholm Edinburgh Paris Oslo Randstad Berlin Manchester Glasgow Source: JLL, 2015 Cities in Northwest Europe demonstrate strongest momentum All the cities featured in the European Top12 sit in the continent s Northwest quadrant. These are among Europe s most successful cities, largely underpinned by common attributes such as high-value activities, technological prowess, robust governance, favourable business-operating environments and highly transparent and liquid real estate markets. These factors have combined to make these the continent s most dynamic cities, helping drive in-migration and robust economic growth, which are boosting their attraction as investment destinations. COPYRIGHT JONES LANG LASALLE IP, INC All Rights Reserved 2

3 JLL City Momentum Index 2015 European Top12 p p Northwest Europe Lisbon Madrid Glasgow Edinburgh Barcelona Oslo Rome Helsinki Stockholm Dublin Manchester Copenhagen Birmingham Hamburg Randstad Düsseldorf Berlin Warsaw Brussels Cologne Frankfurt Prague Paris Stuttgart Vienna Zurich Munich Budapest Lyon Milan St. Petersburg Moscow Kiev Bucharest Istanbul Athens Source: JLL, 2015 and Paris among Europe s top performers Both of Europe s Super Cities (1 st ) and Paris (7 th ) appear in the European Top12, although with quite different dynamics. tops this year s CMI as the most dynamic city globally, boosted by robust economic fundamentals and its increasing status as a global tech hub, underpinned by access to world-class talent. This dynamism is feeding through into a positive outlook for commercial property prices and the world s highest levels of cross-border real estate investment. Short-term momentum in Paris has been negatively affected by weak national growth, but it remains among the world s most attractive locations for real estate investment, with 2014 volumes rising to the highest levels since Longer term momentum will be supported by Le Grand Paris project, an unprecedented 26 billion strategy (over a 15 year period) to strengthen the position of Paris as a globally-competitive world city >>. Technology a key driver of city performance Technology emerges as a strong theme driving city momentum across the European Top12: Germany s tech hubs Munich (3 rd ) and Berlin (10 th ) are benefitting from fast-growing high-tech sectors. The Munich region, also known as Isar Valley, is Germany s most established high-tech cluster and offers a very favourable business environment of global standards for high-tech industries. Meanwhile Berlin has emerged as a creative hotspot and a key location for innovative internet start-ups. Its Silicon Allee has one of the highest densities of hightech start-ups in Europe; and larger technology companies are also now discovering the attraction of the city. Office space demand from the IT sector has increased significantly in both Munich and Berlin and is expected to assume an increasingly important role. COPYRIGHT JONES LANG LASALLE IP, INC All Rights Reserved 3

4 Global tech hub Stockholm (5 th ) is among the continent s most dynamic cities. The city can boast the greatest concentration of high-tech employment in Europe, which is helping to boost demand for prime office space and drive increased investment volumes. The Dutch Randstad (9 th ) also has strong technology credentials, with one the world s largest ecosystems of tech start-ups. The city-region sits alongside the San Francisco Bay and Greater Boston regions in terms of start-ups and patent applications. Dublin (2 nd ) has registered the fastest office rental growth globally over the past year, as tech giants such as Google and Facebook increase their presence and high-tech start-ups flock to the city to take advantage of Ireland s low corporate tax rate and talent. Scandinavian capitals among world s most open and liquid markets All three Scandinavian capitals Copenhagen (4 th ), Stockholm (5 th ) and Oslo (8 th ) feature in the European Top12. Together with strong high-tech sectors, the three cities score highly on liveability measures. Dynamic, sustainable and scalable, they are attracting high levels of migration and investment. Copenhagen in particular has a strong environmental agenda and plans to be the world s first carbon neutral capital city by 2025 through retrofitting, more wind turbines and changing transport habits. The three Scandinavian cities are among the world s most liquid real estate markets, featuring in the top 10 cities of JLL s Investment Intensity Index 1. The relatively quick recovery of the Swedish economy after the Global Financial Crisis, combined with a greater willingness among banks to lend on property, have contributed to particularly high liquidity in Stockholm. UK cities join the Top12 Several UK cities are showing signs of resurgence, with Edinburgh (6 th ), Manchester (11 th ) and Glasgow (12 th ) appearing alongside in the EuropeanTop12, while Birmingham is just outside the Top 12 (in 13 th position). Strengthening economic fundamentals are boosting momentum across the major UK cities, which are seeing robust demand for prime office space, increased rental growth and rising real estate investment levels. New forms of city governance could provide a further boost to the dynamism of the UK s cities going forward, with the recent announcement of significant spending and policy devolution to the Greater Manchester Combined Authority and the backing for further devolution of powers to city-regions by all the main UK political parties. Long-term fundamentals underpin momentum Europe s city leaders increasingly recognise the need to be globally competitive and to consolidate their positions in the cities hierarchy in order to attract and retain capital, corporations and talent. Some European cities are reacting more swiftly than others and the European Top12 are generally better equipped than most to adapt to the new socioeconomic and technological forces. They demonstrate many of the fundamentals necessary for longer-term momentum qualities such as dynamic city governance, global connectivity, world class universities, business-friendliness and highvalue industry clusters. Visionary city leadership as evident in, Paris and Manchester is helping to propel these three cities forward. Other cities have a newfound creative energy, developed organically from a compelling cocktail of proximity, density, world-class universities, entrepreneurialism and openness. The Randstad is among the best examples, while Berlin is catching up fast after years of slow business development. These cities are joining with some of the world s most hightech connected urban economies (such as Stockholm and Munich) to make the European Top12 the most dynamic cities and real estate markets in the region. 1 JLL Investment Intensity Index measures real estate investment volumes relative to a city s economic size. COPYRIGHT JONES LANG LASALLE IP, INC All Rights Reserved 4

5 JLL Regional Headquarters Chicago 200 East Randolph Drive Chicago IL USA Warwick Street W1B 5NH United Kingdom Singapore 9 Raffles Place #39-00 Republic Plaza Singapore Authors Jeremy Kelly jeremy.kelly@eu.jll.com Rosemary Feenan rosemary.feenan@eu.jll.com Matthew McAuley matthew.mcauley@eu.jll.com To learn more about cities and real estate visit our website: COPYRIGHT JONES LANG LASALLE IP, INC This report has been prepared solely for information purposes and does not necessarily purport to be a complete analysis of the topics discussed, which are inherently unpredictable. It has been based on sources we believe to be reliable, but we have not independently verified those sources and we do not guarantee that the information in the report is accurate or complete. Any views expressed in the report reflect our judgment at this date and are subject to change without notice. Statements that are forward-looking involve known and unknown risks and uncertainties that may cause COPYRIGHT future realities to JONES be materially LANG different LASALLE from IP, those INC. implied by All such Rights forward-looking Reserved statements. Advice we give to clients in particular situations may differ from the views expressed in this 5 report. No investment or other business decisions should be made based solely on the views expressed in this report