European Cities Monitor 2011

21 Octombrie 2011

CUSHMAN & WAKEFIELD ROMANIA S.R.L.

With the global economic outlook still uncertain and with companies continuing to focus on being located in cities that can provide them with a cost effective, yet efficient base, cities continue to be in competition with each other to attract inward investment. The European Cities Monitor examines a number of key issues that organisations consider when assessing new locations and indicates how effectively each European city is perceived to perform and where improvements are seen to have been made over the past year.

 

 

 

The leading cities for business

Once again London, Paris and Frankfurt remain the top three cities for doing business, and this has not changed since the survey was first undertaken in 1990. A continued strong performance across the board sees the top two cities still comfortably ahead of the nearest challengers, although Frankfurt has seen its score fall back from last year.

The composition of the top five has changed, with Amsterdam and Berlin replacing Barcelona and Brussels, who have slipped to 6th and 8th place respectively.

The biggest mover this year was Bucharest, which rose up the ranking by eight places to 27th, while Rome saw the greatest fall from 28th to 35th place. Zurich moved back into the top 10 for the first time since 2008, while Dusseldorf gave up the gains it made last year by moving back to 14th place on the rankings.

 

Key factors in deciding where to locate

For the third year running, the most important factor in deciding where to locate is 'Easy access to markets, customers or clients' with 60% stating that this is absolutely essential. More than half of respondents believe that 'Availability of quality staff' and 'Quality of telecommunications' are both equally as important, while 'Transport links with other cities and internationally' has slipped back in people's perception of importance.

With corporate profitability improving over the past year, cost control is viewed as being less important than in the past, with the percentage of respondents seeing ‘Value for money of office space’ and ‘Cost of staff’ also down on previous years.

 

Familiarity with cities as a business location

While the cities in the top ten are unchanged on last year, there has been some movement in their respective rankings. London has retained its top ranking in terms of familiarity as a business location, but second placed Paris continues to close the gap. Last year's third ranked city, Brussels has fallen to 5th and is replaced by Barcelona, with Amsterdam jumping six places to 4th.

 

City promotion

London is viewed as the city doing the most to promote itself, followed by Barcelona, which was nominated by 17% of respondents. The top 5 is completed by Paris, Berlin and Madrid. Of the emerging market cities, Prague, Warsaw and Istanbul are perceived to be doing the most to promote themselves.

 

European expansion

While the number of companies looking to expand into other European countries over the next five years is less than last year, for many it still remains a key strategy going forward. Corporate profitability has been robust in 2011, which has allowed many firms to deleverage their balance sheets and put them on a much sounder financial footing. While cost consolidation remains key, the focus is slowly starting to shift to expansion strategies.

Moscow is still expected to see the largest influx, with 57 companies looking to move there over this period, an increase of 10 on last year. London is now seen as the second most popular location and has pushed Warsaw into 3rd place. Berlin saw the greatest movement, with 11 more companies than last year potentially looking to expand there over the next five years. Interestingly, respondents appear less enthused about expanding in Istanbul, with the number of companies looking to expand there, down 38% on last year.

 

Worldwide expansion

For the second year running, the number of European companies who state that they may consider global expansion is up on the previous year, with the focus remaining firmly on the BRIC economies. Shanghai remains the favoured destination, with 40 companies anticipating expansion there over the next five years. Rio de Janeiro and Sao Paulo also remain popular, although there has been less interest in some of the Indian cities, in particular New Delhi, which has slipped down the ranking. Buenos Aires and Sydney are also attracting a lot more interest than last year.

 

Impact on business

The factor most likely to impact on business over the next ten years is 'Opportunities from emerging markets for products and services', with 31% of respondents believing this to be absolutely essential. Concerns remain over ageing populations across Europe, with 'Demographic and workforce change' the second highest ranked factor, while 'Technological change' was also ranked highly.

Despite improving levels of corporate profitability and stronger balance sheets, business sentiment has remained largely unchanged on last year, with European sovereign debt worries contributing to an uncertain economic outlook.

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