London leads Europe but dwarfed by US tech hubs for venture capital investment

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London enjoys a reputation as a dynamic home to business start-ups, particularly in the technology sector. But while the city may be leading Europe it accounts for just 2% of global capital investment funding.

Data gathered by the Martin Prosperity Institute at the University of Toronto’s School of Management shows that the start-up sector was powered by $42 billion of venture capital investment in 2012 – the most recent available data. London attracted $842 million.

While venture capital investment is becoming more global, the sector is still dominated by the US with cities and metro areas on both the East and West coasts attracting 70% of funding. The San Francisco Bay area, which includes Silicon Valley, attracts a larger proportion than either Europe or Asia.

Amid this US dominance, London is ranked 7th in the list of venture capital investment put together by the Instiitute. Beijing is the only other non-US city in the top 10.

City/Metro area
Venture Capital Investment
(US millon dollars)
Share
1 San Francisco £6,471 15.4%
2 San Jose $4,175 9.9%
3 Boston $3,144 7.5%
4 New York $2,106 5%
5 Los Angeles $1,450 3.4%
6 San Diego $1,410 3.3%
7 London $842 2%
8 Washington DC $835 2%
9 Beijing $758 1.8%
10 Seattle $727 1.7%

London fares quite well in these rankings because it is a large and dynamic city. The growing mega cities of China and India have a similar advantage. But London fares less well when investment is considered on a per capita basis. London then slips to 39th in the global rankings with around $60 per head. In San Jose it is more that $2,000 and many smaller US cities jump into the top 20.

London also falls behind some other UK and European cities in the par capita calculations.  Edinburgh, Bristol and Liverpool have all succeeded in attracting more venture capital per head of population.  But their populations and total investments are a fraction of size of London.

The UK capital still dominates Europe for total investment with Paris trailing in second with $449 million.  While there is a greater global spread of money the bulk is still concentrated on large urban centres, and that will continue to be to London’s advantage.

Source data

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Majority of the 50,000 second homes are in 4 central boroughs

Kensington Chelsea-2Nearly 50,000 properties in London are designated as second homes and lie empty for much of the time.

The figures are revealed in the Council Tax listings and show more than half of the second homes are in just 4 areas – Kensington and Chelsea, Westminster, Camden and Tower Hamlets.

In Kensington and Chelsea around 1 in 10 dwellings is defined as a second home. Westminster has 6075, or 5% of its housing and there’s a similar proportion in Camden and Tower Hamlets.

Second homes

The highest proportion is in the City of London where 32% of properties are second homes. And outer boroughs such as Enfield, Hillingdon, Hounslow and Merton have over 1,000.

A second home is defined for Council Tax purposes as one that is not the main residence and used for a limited time during the course of a year.

The idea of a pied-a-terre for those living outside the capital with the wealth to afford a small London base is long established. But there’s concern that overseas property buyers are now fuelling the market, purchasing homes as an investment and happy to leave them empty.

This has an impact on the property market, increasing demand, pushing up prices, and contributing to the crisis of cost and affordability in the London.

Source data

See also

Why the London property market is heading back to the 1970s

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Financial sector’s post election confidence helps city pip NY to top ranking

city aerial 2London has notched up another win in the see saw contest with New York to be the world’s leading financial centre. The latest edition of the Global Financial Centres Index, a research project that reports twice a year, places the capital just ahead of its American rival.

But it’s a close contest, as it has been since the index, created by financial research organisation Long Finance, was first published in March 2007. London comes out on top as greater confidence returns following uncertainties created by the Scotland independence referendum and the general election.

The index is based on a survey questionnaire of 3,200 financial sector professionals plus data from the UN, World Bank and the World Economic Forum. It is scored out of 1,000 and London won by just 8 points.

The assessment is split into 5 categories: business environment, financial sector development, infrastructure, human capital, and reputational and general factors. London came top in each category after losing to New York in 3 of them last time.

After London and New York the top 5 is completed by Asian cities – Hong Kong, Singapore and Tokyo, with Seoul in 6th place. Zurich is the only other European financial centres in the top 10, which is completed by North American cities.

Global Finance Centres Index

Geneva, Frankfurt and Luxembourg make the top 20 but Paris only manages 37th place. Sydney ranks at 15 with Dubai a place below.

In building the index, assessments are only included from people from outside each centre to avoid any home preference. Respondents from North American and the Middle East are most positive about London, while those from Latin America, Asia/Pacific and Western Europe view it less favourably.

Analysis of the data split into industry sectors shows London comes top with respondents in investment management, banking, government and regulation, and professional services. It is only beaten by New York for those in the insurance sector.

The data also reveals that bigger companies favour New York, just, but those with fewer than 2000 employees rate London more highly.

The longer-term trends in the index show that the dominance of Western Europe and North America is being eroded as Asia/Pacific grows, particularly through the rise of China.

Stability has been key to the success of leading financial centres and the researchers point out that the strongest ones are successful, cosmopolitan cities in their own right.

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Council finances show most in debt, while City has largest investment fund

cash sterling notesThe London boroughs, excluding the City of London, have combined net borrowing of £2.34 billion pounds. And most of the boroughs have borrowing in excess of investment. In 4 boroughs the debt is more than £1,000 per resident.

Urbs looked at the end of financial years statements for local government bodies, produced by the Department for Communities and Local Government.

We looked at the net numbers – the investment minus borrowing.

All 32 boroughs plus the City of London had investments of £7.72 billion in 2014/15 and borrowing of £9.01 billion. That gives a net position of -£1.29 billion. But if the high investment level in the City is excluded this becomes -£2.34 billion for the 32 boroughs.

21 boroughs have net debts. The highest level of net borrowing is in Croydon where it is -£1,473 per resident. In Islington it is -£1,046, in Southwark -£1,024, and in Kingston -£1,006.

11 boroughs have net investments with the highest level in Westminster with £1,170 per resident.

Council debt

The City of London, which is a corporation rather than a council, has a very different financial situation to the boroughs. With high levels of investment and a small resident population it shows a level of investment per person of £128,000.

Source data

See also

More than a quarter of UK tax revenue generated in London

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Foreign property investment helps London to top of global ranking

towers and cranesLondon has come top in a global cities ranking that tracks the pace of change in the commercial property market and some underlying economic indicators.

The City Momentum Index is put together by international real estate and investment company Jones Lang Lasalle.  They used a weighted index to look at socio-economic factors like GDP and population, commercial real estate factors such as price, construction and investment, and what they call high value incubator factors like education, technology and the environment.

JLL examined 120 cities across the world.  Their top 20 includes 7 cities in China and 4 in the US, including London’s great global city rival, New York at 18th. Dublin was the only other European city to make the top 20.

The top 5 are:

  1. London, UK
  2. San Jose, USA
  3. Beijing, China, 
  4. Shenzhen, China
  5. Shanghai, China

JLL said that London achieved the top spot due to strong economic fundamentals and a high volume of commercial property investment from overseas.  Although not in the top 20, European cities including Paris, Berlin, Copenhagen and Stockholm perfomed well in education, innovation and technology.

JLL points out that the list does not indicate that the top 5 offer the best commercial property investment but shows a rapid rate of economic change and momentum in the city’s real estate market.

Source data

See also:

NY beats London in economic power

London flies flag for West as East leads global growth ranking