Forget the negative headlines
– London is doing very well, thank you
If ever there was a time to be negative about London, this might be it, writes Graham Norwood.
Brexit uncertainty, housing market woe, High Street shops hit by the internet: we’ve all seen the stories. But look behind the headlines and – yes, honestly – there is cause for optimism.
Firstly, look at London as a jobs and services centre. Overseas buyers led by Hong Kong billionaires and Korean securities firms spent more on London offices in the first half of 2018 than in central Paris, Manhattan, Munich and Frankfurt combined.
Surprised? Well, you probably shouldn’t be because whatever happens with Brexit, the UK will continue to be a strategic commercial centre, especially for firms with headquarters outside of Europe. Combine that with the attractiveness of London because of the exchange rate, and you have a recipe for success.
International investors spent £5.6 billion on London offices in the six months through June, according to Knight Frank, encouraged by the strong employment market and innovative tech and flexible office operators like Google and WeWork contributing to the boom.
“London office prime yields can seem good value to overseas investors,” according to William Matthews, head of capital markets research at Knight Frank.
Secondly, on the residential front, the data consultancy LonRes – which monitors all central London house and apartment transactions – says prime central London homes enjoyed modest price rises of 1.2 percent in the year to mid-2018.
A small rise? Of course – but it’s an increase nonetheless and not the gloom and doom that has characterised the capital’s market in some headlines.
Thirdly, let’s look at a broader measure of London’s business performance – the Purchasing Managers’ Index compiled by the Institute for Supply Management.
This sounds deadly dull but it isn’t. In fact, it’s a key indicator of how an economy performs because it takes account of new orders, inventory levels, production, supplier deliveries and employment across a wide range of private business sectors.
Within London the PMI reached 54.7 in May, the latest figure available. That was the highest for a year, and any measure above 50 represents business growth.
Finally, and again relating the wider economy, the London Chamber of Commerce and Industry publishes a quarterly ‘Capital 500’ survey measuring financial statistics from 500 of London’s major private companies.
Quarter two 2018 (the latest) shows a ten point rise on the previous three months, and takes the level back to where it was two years ago – just before the EU Referendum.
So of course the housing market is tough and of course we would like more certainty. But let’s keep a sense of perspective and remember – London is a vibrant world city, and that isn’t changing whatever happens.
“London is a vibrant world city, and that isn’t changing whatever happens”