February 22, 2011
Indexing cities: which are the ones to watch in the coming years?
With two weeks to go until MIPIM 2011 it is a good time to ask how Europe’s cities will fare in the new global investment cycle that is now beginning. Amid the buzz surrounding the remarkable emergence of cities and ‘mega-regions’ in Asia and Latin America, and the passionate debate on the fluctuating fortunes of the post-Fordist American city, it is timely to reflect on urban and metropolitan performance in the continent where the first modern cities were built – Europe.
Comparing de-industrialising, post-imperial, European cities with urban centres on very different trajectories around the world is no easy task. We have, though, a distinctive lens through which to understand such complexity, in the form of city indexes, rankings and benchmarks. These comparative assessments, both regional and global in scope, have proliferated in recent years and collectively they represent an important tool for investors, city leaders, policymakers and citizens to gauge the real and perceived success of a city. Indeed, indexes in the years since the global financial crisis began can tell us a very instructive story of the past, present and future of European cities.
From the broadest perspective, European cities appear well-placed to tackle and overcome several of the biggest challenges confronting all cities in the 21st century. Index results since 2008 suggest that, on average, large European urban areas have the best quality of life perception, educational institutions and historical brand recognition of any major continent in the world. On the other hand, it is the rise of the leading Asian powerhouses – Beijing, Shanghai, Hong Kong and Singapore – that is having the biggest impact on European city performance in world rankings. These Asian economies have hugely outperformed European hubs outside London and Paris in economic and finance measures and real estate dynamism, while also gaining ground as political centres, with important global economic decisions now taken there rather than in many historic imperial cities across Europe.
But once we go beyond the headline regional trends, it is clear that across Europe there are varied fortunes. Several cities emerge as dynamic performers globally, while others are regularly falling down the rankings as a larger number of cities outside Europe become internationally competitive. Alongside Paris and London, the established global cities of Europe, four other cities stand out among the top European performers since the recession: Barcelona, Berlin, Stockholm and Zurich. Each very different, these four have recorded excellent scores on cultural and/or niche economic-science functions. Barcelona’s performance across city indexes since 2008 shows how smaller European cities can continue to project an image beyond their size, recording outstanding results for quality of life and international travellers despite trying economic circumstances. While it does not play host to a high concentration of global firms, Berlin has improved its standing in a whole suite of cultural, intellectual and political measures. Stockholm, included for the first time in the selective Cities of Opportunity study, is consistently top-ranked for provision of higher education, public transport, health, green spaces and R&D. And though often omitted from indexes which only examine large world cities, Zurich has consolidated its place as a highly competitive niche finance provider and is by far the smallest city to make the top 15 of the Global Power City Index and the Global Financial Centres Index. These medium-sized European hubs, joined on occasion by Vienna and Munich, punch well above their weight in global urban rankings, even if success is only achieved in some realms and does not suggest an all-round offering capable of matching Paris and London in the near future.
Yet outside this select group there are clear signs that the continent’s cities are being rapidly matched and surpassed by other world cities on a range of benchmarks. Across indexes on everything from business and investment prospects, embeddedness in global firm networks, expensive real estate locations to international transport provision, European hubs no longer dominate lists. According to PwC, Rome, Milan and Vienna are forecast to drop out of the world’s top 50 wealthiest cities (by GDP) by 2025, while eight others are set to fall out of the world’s top 100. Frankfurt, Europe’s third city for over a decade, is gradually losing ground as quality of life, socio-cultural dynamism and brand have trumped financial measures. Many cities’ pre-eminence in terms of historic prestige and social richness have, it appears, not been optimally leveraged. More than one index makes the point that political importance is no longer intimately correlated with a city’s global reach.
In between the winners and losers in Europe are a cluster of historic cities that are holding their own. Amsterdam, for example, remains fairly robustly rated for quality of life, culture and environment, but its decline on business and innovation measures means it is soon set to lose ground. Overall, while some European cities retain their pre-eminence based largely on factors of historic prestige, social richness and successful city branding, cities that have been unable to effectively leverage off these factors are witnessing a decline in global index positioning.
Evolving on a slightly different course are the capitals of Eastern Europe. In comparison to leading Asian lights, Eastern European cities are emerging somewhat slower at the top of global indices, both in terms of business, brand and liveability. Warsaw is has consistently shown business ranking improvements, and has recorded the fastest growth in finance ratings in the region, but this is from a very low base. Likewise Budapest and Prague are all progressing up world rankings in real estate and quality of life, but at a very modest rate of improvement. And Moscow and Istanbul both lost more than five places in the major Global Cities Index in 2010, indicative of their volatile performance and perceived vulnerability to crime and terrorism. None of this important cluster of European cities appears likely to break into the upper echelons of the urban hierarchy any time soon.