- The capital has seen an upturn in FDI projects since end of 2022, while New York, Paris, Berlin and Hong Kong suffer decline
- London was the highest recipient of FDI transitions in Europe during Q3 2023, attracting £1.3 billion of capital
- Paris, the UK capital’s closest peer in continental Europe, saw only 20 FDI deals, a 75% decline on the previous year
- Big ticket deals demonstrating a recovery in real estate investment included private equity group Brookfield and the Qatar Investment Authority’s £400 million injection into Canary Wharf
The London Property Alliance, which represents the UK capital’s leading real estate developers and investors, has published the latest edition of its Global Cities Survey which shows London is surging further ahead of global rivals New York, Paris, Berlin and Hong Kong in attracting foreign direct investment (“FDI”). This includes corporate relocations, investments into UK companies and real estate transactions.
Overall London’s FDI volumes were up 16% to 103 projects and deals, from the 89 recorded at Q4 2022, when widespread interest rate hikes began to slow cross-border investment globally. Numerous real estate transactions helped to support this capital inflow, including the owners of Canary Wharf Group, Brookfield and Qatar Investment Authority, committing £400 million towards the mixed-use district’s long-term development ambitions.
Meanwhile, in the same period Paris saw a sharp 75% decline in the number of FDI projects from 79 to 20, in the run up to the city hosting the 2024 Olympic Games. Berlin also saw a decrease from 46 to 24 projects (-48%) with New York and Hong Kong both registering a slight decline (50 to 42; 35 to 29 respectively).
According to the Greater London Authority, FDI projects secured in London Q3 2023 represented a total of £1.3bn 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 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. The research is compiled by the Centre for London think tank with unique data supplied by Oxford Economics and London & Partners.
It shows that London’s labour market remains robust with an unemployment rate (5.3%) lower than Berlin (9.3%), Paris (5.5%) and New York (5.4%).
In addition, London’s key business districts are seeing strong growth in office rents suggesting demand for workspace and business confidence. 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. This is significantly ahead of Berlin (3.5%), Paris (3.1%) and New York’s Midtown (2.1%) – and in stark contrast to Hong Kong where rents were down (2.3%) over the same period.
Howard Dawber, Deputy Mayor of London for Business, and Chair of London & Partners, said:
“I’m delighted that London has been ranked as the number one global city for foreign direct investment. London is roaring back, and investors are increasingly drawn to the capital as an international city and gateway to Europe.
“London’s reputation as a world-leading hub for financial and professional services and tech innovation – coupled with our excellent transport system, robust legal system, time zone benefits and highly-skilled, diverse work force – sets us apart from other cities around the world. London is also a great place to live, and a great place to visit.
“This is all helping to attract global capital that will underpin job creation, deliver workspace and infrastructure, and enable businesses to thrive and grow here – in turn helping to build a better, more prosperous London for all.”
Charles Begley, Chief Executive, London Property Alliance said: “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. But we cannot be complacent as increased complexity and uncertainty in planning and policy is adding greater risks, whilst other global cities and asset classes continue to compete for capital.”
Read the report here
