Resilient London stays at the top by adapting
MIPIM is an acronym which I suspect not many people, outside of the property industry, have come across. It is a real estate show for professionals held every year in Cannes, France. This year over 19,000 attended over 4 days to talk about property. Although the location may suggest this is just another junket it is in fact one of the most important events in the property calander. Canada always attends, led by the policy chairman, both as a major property owner and as the planning authority of the Square Mile. It also gives a very good indication as to how investors from around the world view the City and London as a place to invest in.
Reflecting the general economic conditions the mood of the show was clearly uncertain about the near term, with worries over the Eurozone and the prospects for economic growth generally. Despite this, I am pleased to say, London and the City remained the favourite place for overseas investors and I met many overseas institutions that are actively seeking to buy property in the Square Mile. The amounts involved are fairly mind-boggling.
Sadly the opportunities to invest are currently limited as the development pipe-line struggles with difficult financing and tenants reluctant to commit to new space until a degree of economic stability returns. The banks are struggling to meet new capital requirements and already have a lot of property in their balance sheets so that source of financing is very much closed to finance speculative, (that is without a signed up occupier) building.
Undoubtedly this somewhat circular problem of supply and demand will eventually resolve itself, as the general economic background starts to improve. We will just have to be patient.
Apart from the demand for property in London and the City, which gives a clear indicator as to how we are doing internationally, another measure is the amount of Foreign Direct Investment (FDI) we have seen over the past year. Again London hits the top spot.
In my role as a board member of London and Partners, I was more than delighted to collect an armful of prizes at fDI magazine’s annual award ceremony where London was at the top of a very long list of other European Cities.
Of these, the best award was for “European City of the Future”, reflecting the new dynamism we are seeing in many parts of the City towards building small businesses for the future.
Tales of London starting to lose its footing on the global financial stage, coupled with the continued upsurge in growth from emerging markets, can at times make our prospects seem unduly bleak. But we must not lose sight of our continued achievements and the opportunities open to us in the future.
Throughout the economic downturn, not only has London held its reputation as an international leader in financial services, it has also as managed to maintain its share of the global financial services market, which remains at its pre-crisis value of 31 per cent.
The reason London is so resilient is because it adapts. It innovates. It invests. It stays modern. It remains at the top of its game. It treats the changing shape of the world economy as an opportunity, not a threat. Let us rejoice in that fact and challenge the doomsters who keep predicting the end of everything.
Stuart Fraser is the policy chairman at Canada corporation.