Survey finds that London leads rival cities when FDI compared

London is surging ahead of global rivals New York, Paris, Berlin and Hong Kong in attracting foreign direct investment according to The London Property Alliance in the latest edition of its Global Cities Survey.

The Global Cities Survey analyses the performance of leading global cities across a range of indicators, including job vacancies, air passenger numbers, office rents and vacancy, public transport usage and Airbnb occupancy, corporate relocations, investments into companies and real estate deals. The research is compiled by the Centre for London think tank using data supplied by Oxford Economics and London & Partners.

The London Property Alliance, which represents leading London-based real estate developers and investors, said that London’s FDI volumes were up 16% to 103 projects and deals. This was compared to 89 recorded at Q4 2022, when interest rate increases began to impede cross-border investment globally.

During the same period Paris saw a 75% decline in the number of FDI projects from 79 to 20, despite being in the run up to hosting the 2024 Olympic Games. Berlin meanwhile experienced a decrease from 46 to 24 projects (-48%) with New York and Hong Kong both registering a slight decline (50 to 42 and 35 to 29 respectively).

According to the Greater London Authority, FDI projects secured in London Q3 2023 represented a total of £1.3 billion in capital investment.  The uptick underlines London’s resilience despite five UK interest rate rises in 2023 and both a Mayoral and General Election ahead in 2024.

The report also points out that London’s labour market remains robust with an unemployment rate (5.3%), which was  lower than Berlin (9.3%), Paris (5.5%) and New York (5.4%). Growth in office rents in London’s key business districts also suggests demand for workspace and business confidence is good, said the London Property Alliance.

At Q3 2023 rents for prime offices in London’s West End were up 10.5% year-on-year, with the City of London recording a 6.9% rise, ahead of Berlin (3.5%), Paris (3.1%), New York’s Midtown (2.1%) and Hong Kong where rents fell (-2.3%) during the same period.

Nevertheless, London does not have all measures in the bag. The report indicates that in January 2024 Hong Kong lead the rankings in terms of economic output, unemployment and inflation; Paris led in terms of employment, job vacancies, office vacancies and public transport usage; New York was ahead on airport passenger demand and air quality; and Berlin was ahead on Airbnb occupancy.

“London’s diverse economy and its ability to attract talent from across the world is driving demand for best-in-class, sustainable workspace, making it a much sought after asset for overseas investment,” said Charles Begley, chief executive, London Property Alliance said: But we cannot be complacent as increased complexity and uncertainty in planning and policy is adding greater risks, while other global cities and asset classes continue to compete for capital.”