London, Manchester and Edinburgh have all ranked in the top 15 in a new European cities index for real estate investment, based on their ability to address transformative structural trends, including climate change.
The Swiss Life Asset Managers’ European Thematic Cities Index 2021 measures European cities against five core city themes that are aligned with major trends shaping a city’s real estate market:
- Dynamism – the ability and means to adapt to and embrace changes.
- Healthiness – the ability to build resilience to a shifting climate and support the wellbeing of citizens.
- Networks – the ability to support and grow professional and personal communities.
- Cosmopolitanism – the ability to meet the changing consumer demands of multicultural residents.
- Accessibility – the ability to connect citizens to the physical and digital world.
The index, which will be updated annually, provides an overall ranking for 137 European cities in 29 countries. The model behind it includes 49 attributes and is based on the Organisation for Economic Cooperation and Development’s handbook on constructing composite indicators. The model is based on data from 2thinknow, Oxford Economics, Eurostat and the European Environment Agency.
Where Swiss Life believes its index differs from other city rankings is its focus on the structurally driven themes that shape real estate demand. It aims to avoid a large city bias by predominately using per capita attributes and also takes trend forecasts into account, benefiting cities with the most potential for further strengthening.
London sits at the top of the ranking, followed by Paris and Amsterdam. A total of 24 UK cities feature in the index and perform well within the European rankings, reflecting their strong underlying economic and “liveability” characteristics.
Along with London, Manchester and Edinburgh, Bristol, Cambridge and Milton Keynes also rank among the top 25 European cities. A total of 20 UK cities rank in the top half of the overall European ranking.
The lowest-ranking UK city is Hull, in 108th place overall, with high potential for improvement, particularly across city networks and city healthiness.
The index suggests that the UK’s regional cities hold their own when it comes to thematic strength (see tables). Swiss Life said this does not just relate to pure economic or population size, but rather to how well they respond to the needs of the workforce, residents and businesses. This will be key in attracting and retaining knowledge-based businesses and talent in a rapidly changing world. Whether Brexit has an impact on the long-term structural attributes of UK cities will only become clear over time.
Giles King, chief executive of Mayfair Capital, part of Swiss Life, said: “Thematically driven investment is one of our key strengths at Mayfair Capital. This purely data-driven index is a great add-on to our real estate expertise. Combined with other information and qualitative assessments, it will help us navigate through the rapid structural changes that impact the demand for real estate.”
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