It’s time to think positively about the UK’s cities and celebrate their resilience. That was the overriding view of panellists speaking at EG’s launch of its UK Cities Investor Guide at MIPIM last week.
While foreign direct investment across the globe dropped by 35% in 2020, the UK’s major cities demonstrated their resilience and attractiveness with FDI dropping by “just” 17%.
Sarah Green, chief executive of Newcastle Gateshead Initiative, was brimming with excitement for her city, saying that while the pandemic has obviously brought about hardships, it has also opened up a number of opportunities for the Newcastle region.
“There is no question the pandemic has effectively changed our city and the opportunities forever,” she said. “But it has unlocked some things we wanted to accelerate and allowed us to step back and think about what is really important.”
She added: “What we are seeing is that we are going to have to work even harder as a city to bring people in, to bring investors in and give them what they want. They don’t want buildings anymore. They want to talk about investing in place and they want to be with us for the long term.
The panel
- Sarah Green chief executive, Newcastle Gateshead Initiative
- Barry McKeown partner & head of office, Shoosmiths
- Ken Poole head of economic development, Cardiff Council
- Richard Rees managing director & head of national development services, Savills
- Tony Reeves chief executive, Liverpool City Council
- Ben Sanderson managing director, real estate, Aviva Investors
“They want to understand our vision and our goals around sustainability and our goals on skills and they want to be part of that objective and part of that long-term vision for the city.
“If they can see that vision, and if we can supply the sites where they can truly make place, then they are really keen to get behind us and stay with us long term.”
The need for cities to have a clear vision and understanding of where their strengths lie was a sentiment shared by all the panellists.
For Liverpool City Council chief executive Tony Reeves, that was about harnessing its skills in the life sciences sector and drawing on what it achieved during the pandemic to attract talent, occupiers and investment to the city.
“The key issue to get things moving in a lot of our cities is getting the right projects; and the right projects need the right occupiers to de-risk them,” he said.
“At the moment, if you’re looking at the office market, for example, quite a lot of big national organisations that have strategies to change their real estate are still pausing those. We are still having conversations and are very confident that will come back, but until people are ready to come back to work and organisations are ready to bring all their people back to work, I think we will still have a slight hiatus. So, for me, it’s about great projects underpinned by good occupiers and then things will free up.”
He added: “For us, it is absolutely concentrating on our strengths, making sure we have really clear, coherent plans for places and making sure we play to our strengths and create the conditions for long-term partnerships with good investors who want to have skin in the game for the long term and build quality, great places and actually create a sustainable, thriving, inclusive city. And I’m really confident we’ve got the ingredients to make it work. It’s about concentrating on our strengths and building the right relationships. If we do that we will absolutely thrive.”
‘The city is not dead’
“Ultimately, we are competing on the global stage for inward investment across the globe,” added Shoosmiths partner and head of office Barry McKeown. “This isn’t just about Glasgow competing with Newcastle or Liverpool. It’s Glasgow competing with all the major cities in the world to attract real occupier demand, real investment, and I think that is one of the key messages. Cities have to play to their real strengths, not trying to be everything for everyone, but focusing on the things that the cities can really do well. The educational establishments, the life sciences sectors, the financial services sectors and being best-in-class and not all competing with each other but identifying the thing that drives the difference.”
For Cardiff Council head of economic development Ken Poole, clarity and partnerships were key in enabling the city and the region to thrive.
“It’s about preparing the city for the return of investment,” said Poole. “We believe the city is certainly not dead. There was a lot of negativity in the early stages of the pandemic that cities were finished. They are not finished and we certainly see levels of interest that give us the confidence the city centre will come back. It will be a different city centre. It won’t be as dependent on retail perhaps as it was in the past, but it should be different and certainly will still be making a major contribution to the economy of Cardiff, its region and Wales.”
Poole believes that if cities can provide a strong vision for the private sector and can show investors and occupiers how they are going to attract talent to their cities, then strong and effective partnerships can be built.
“The key part of that vision and confidence is building for the future,” he said, “particularly infrastructure that can help address some of the challenges we see in the region.”
For Cardiff, that infrastructure is a metro enabling better connection for 1.6m people across the city.
“What is interesting to me is that where cities get it right is where the public and the private sector work together,” said Savills managing director and head of national development services Richard Rees. “To me, it’s about identifying themes for areas, deliverable development propositions. If we could get central government and local government to focus on deliverable infrastructure, I think we can begin then to really enjoy the differences between all the UK cities, which stand up very well in comparison with many places across the world.”
“Having that long-term strategic view of the way in which cities are going to be used in the future is what drives and will attract new quality inward investment into all of the big cities in the UK,” said Shoosmiths’ McKeown. “What we need to look at is how do we ensure we have the footfall to drive and enhance the locations there are. That’s investing in infrastructure, that’s investing in public realm works and making our cities feel individual, but still have all of the things that we want to attract the people back in, because it needs people. Without those people, none of it really works. And I think that is the key driver for all of us.”
For Aviva Investors managing director of real estate Ben Sanderson, it is a case of if you have it, they will come.
“From a capital perspective, what has happened in the past couple of years is that capital has really seen the power and influence it can have in shaping cities and having a positive social and economic impact,” he said. “That’s an accelerating trend. Capital realises it can have a positive social impact on many of our towns and cities. Combine that new realisation with the fact many of the capital partners we work with and many of the capital sources are structurally underinvested in real estate and it means there is a positive dynamic [for UK cities] as you look forward.”
The future for the UK’s cities really is bright. There is a wall of capital waiting to invest, and if cities can understand and play to their strengths and focus on the opportunities that two years of accelerated learning have brought, then the capital will come.
To send feedback, e-mail samantha.mcclary@eg.co.uk or tweet @samanthamcclary or @EGPropertyNews
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