Tech Cities: Digital dilemma

Spotlight: Prime London & Country 2017
 
Digital dilemma

26 April 2017 - Paul Tostevin

London's status is a big draw for tech start-ups and multinationals. But could the capital's high cost of living undermine its future position in Savills' Tech Cities ranking?

 

Each year, Savills compiles a ranking of the 22 global centres at the forefront of tech, all of which have thriving and growing tech industries. The report, Savills Tech Cities, aims to understand the diverse factors that make a location a desirable choice for the tech sector.

Assessment for each city comprises more than 100 metrics, ranging from the number of days needed to start a business through to the cost of a flat white. These metrics are grouped into five categories: business environment, tech environment, city buzz & wellness, talent pool and real-estate costs. While the top three positions in the 2017 programme are occupied by the US cities of Austin, San Francisco and New York, London scores strongly to take fourth spot; it's the top-placed city outside the US and the highest-ranked in Europe.

London receives more venture capital and is home to more start-ups than any other European city. From fintech to artificial intelligence, London performs well across a wide range of tech subsectors and its world-city status provides growing tech companies with a platform for global expansion.

One of London's biggest advantages lies in its ability to attract skilled workers - essential to any successful tech company. London scored top in our measure of 'city buzz' for its depth and breadth of restaurants, nightlife, concerts, retail, museums and café culture, making it attractive to talent from across the globe.

FIGURE 1

 

 
World's top tech cities

It’s also home to more top-rated universities than any other city, supplying a steady stream of skilled workers to the sector. Plus, London is youthful; there are 1.3 millennials for every one boomer; and total population is forecast to grow by a further 11% over the next decade.

But London does face challenges, particularly when it comes to property prices and the high cost of living. Austin (the number one Tech City), Amsterdam and Dublin have emerged as successful tech centres in part because they offer city living on a smaller footprint with lower costs. For employees, this means more disposable income, shorter commutes, easier access to amenities and a better work-life balance. For tech businesses, it means lower rents.

As long as London's tech companies are able to continue to recruit talent from across the globe, the city's Tech City status would seem assured. Cost pressures, however, mean that the biggest challenges might come from smaller cities such as Amsterdam and Berlin, where property is significantly cheaper.

FIGURE 2

 

 
World's top tech cities
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