Survey: London the best place to locate business

Real Estate Weekly, Nov 13, 2002

The availability of qualified staff has become the single most important factor for companies deciding where to locate, according to European Cities Monitor, an annual survey by international real estate services firm, Cushman & Wakefield Healey & Baker.

This is the first time since the survey was initiated in 1990 that "availability of qualified staff' has overtaken "easy access to markets and customers" as the most important location factor. London, headquarters to Cushman & Wakefield Healey & Baker, is ranked No. 1. Also registering big improvements in terms of availability of qualified staff are Warsaw (up nine places to 19th), Madrid (up five to 10th) and Dusseldorf (up five to 9th).

Overall, London is the "Best city to locate a business today," followed by Paris and Frankfurt. Milan moves up into the top 10 for the first time, with Prague and Dusseldorf improving the most, each going up four places; Manchester had the biggest decrease, going down five places.

David Hutchings, head of Cushman & Wakefield Healey & Baker's European Research Group, said: "Once again, Europe's top companies have nominated London as the best city in which to locate a business. But London beware! Our survey clearly shows London's position will be harmed in the medium term if the UK fails to drop the pound and switch to the Euro.

"Central Europe is the key target for future expansion of European companies. This stands against the backdrop of many of the countries in the region on the likely brink of joining the European Union. Looking to Asia, companies' sights are set on the buoyant markets of the two key Chinese cities of Shanghai and Beijing."

European Cities Monitor 2002 is based on interviews with Senior Managers or Board Directors with responsibility for location of 506 top European companies. The respondents were asked about their views on Europe's leading 30 business cities. They were also questioned about location strategy, particularly in light of the terrorism threat following the events of Sept. 11, 2001, and their future expansion plans, both inside and outside Europe.

Other key issues emerging from this year's European Cities Monitor include:

* The importance of quality of life for employees continues to rise as an essential factor for locating a business: 18% of those interviewed said quality of life was an "absolutely essential" factor compared with 15% in 2001. Barcelona is viewed as having the best quality of life of all the cities in the survey.

* Since September 11, 2001, almost half the companies interviewed have reviewed their property strategy in some way, with contingency planning and security arrangements being the most common changes. More than a quarter of the companies have made some review of their locational policy.

* Forty-one percent of companies say the performance of the U.S. economy will have the greatest impact on their business over the next 10 years--up from 32% last year. Two years ago the internet was seen as the most significant factor--this year only 19% of interviewees believe the internet will have the greatest impact.

* Brussels maintains its clear lead as the perceived future political center of Europe as its only serious rival, Berlin, slips.

* London holds its lead as the perceived future financial capital despite concerns over the UK not joining the Euro-zone. However most respondents believe hanging on to the pound will harm London's posistion in the medium term.

* Half of all companies surveyed have made a change in location within the last year. UK companies (69%) and Spanish companies (61%) are the most likely to have made changes to their location in the last year. The most common move was to another location in the same city. Fifty-four percent moved to expand and 17% to contract or close.

* In terms of future expansion, Warsaw comes out on top as a destination to open a new office, manufacturing, sales or distribution outlet, followed by Budapest, Prague, and then Moscow and London in joint fourth position.

* Shanghai topped the list as the city that can expect to see the biggest influx of new European companies, followed by Sao Paulo and Beijing.

Dublin and Barcelona are seen as the cities that are best at promoting themselves.

The 30 European cities in the survey are ranked in terms of the following factors: qualified staff, easy access to markets, external transport links, quality of telecommunications, climate created by government, cost of staff, value of office space, availability of office space, internal transport, languages spoken, quality of life for employees and freedom from pollution.