- Latest Global Cities Survey shows London’s economic recovery is racing ahead of Paris, Berlin, New York and Hong Kong across a range of indices – reinforcing London’s position as an economic powerhouse
- Despite widespread concerns around disruption in the air sector, strong recovery in traffic at London’s airports signalled London’s post-Covid recovery is well underway – with a rise from 37% to 74% of pre-Covid (2019) demand recorded (January to April 2022)
- London overtakes New York in workplace activity but continues to trail Paris and Berlin
- Prime office rental values in the West End sharply up in Q1 – a rise of 12.2% compared to 2021 levels
The London Property Alliance has today published the third issue of its quarterly Global Cities Survey. The research, which is undertaken by Centre for London, charts the economic recovery of London, New York, Paris, Berlin and Hong Kong and provides an analysis of the latest data available across 19 economic and societal indices.
This new report reveals London’s economy has put in a strong performance in Q1 of 2022, outperforming competing global cities in areas such as economic output, employment, rental growth and foreign direct investment.
The UK capital recorded its highest employment rate compared to competitors in the first quarter of this year, signalling the city’s economic turnaround. London employment is now more than eleven percentage points ahead of New York compared to 2019 benchmarks. And in a further vote of confidence, London’s West End and City rents (for prime space) rose by 12.2% and 7.7% respectively (Q1 2022 on Q1 2021). But both New York (Midtown) and Hong Kong saw negative growth. Weakening demand is reflected in office vacancy rates for both cities (21% and 10.9% respectively); despite a slight increase, rates of Central London vacancies remain firmly in single digits at just 8.7%.
On Google’s workplace busyness measure, all cities in our survey remain below their pre-pandemic benchmarks. However, London is now above New York (May 2022 data), with the highest rates of workplace activity so far since the pandemic (25% lower than pre-pandemic rates). But the capital still trails Hong Kong, Berlin and Paris.
Alexander Jan, Chief Economic Advisor to London Property Alliance and one of the authors of the survey, said: “The findings of the latest Global Cities Survey are encouraging and demonstrate London’s strong economic performance and recovery against international competitors despite the wider UK’s economy slowing down.
“Post-pandemic trends relating to our travel, working and shopping habits are clearly a feature of everyday life in London, and our rival cities. We must not let disruption to our airports, railways and TfL services derail the green shoots of recovery.”
The analysis shows that New York and Hong Kong are struggling to recover in some key areas. Hong Kong still has a range of Covid-related restrictions in place in its quest to achieve “dynamic zero infection”.
Charles Begley, Chief Executive of London Property Alliance said: “London continues to play a critical role in supporting the UK’s economy and post-pandemic recovery. Strong performance in employment and commercial property, particularly in central London, is undoubtedly a vote of confidence.
“The government’s commitments to ‘level up’ the country are welcomed, but this must not come at the expense of the capital’s prosperity. Like other global cities, London’s recovery is precarious. Any decision making in policy and funding must reflect London’s role as the UK’s economic powerhouse as well as its very special international status.”
- Employment: London now has the greatest number of people in work out of the cities reporting data in Q1 2022 compared to the pre-pandemic benchmark. This is despite a decline in the number of people who are economically active. New York City has haemorrhaged jobs whilst Hong Kong is experiencing a steady decline.
- Unemployment: London’s labour market saw the strongest recovery out of the cities reporting data in Q1 2022 (though levels of inactivity, particularly among older workers, have increased), being the only city surveyed recording a lower unemployment rate compared to pre-pandemic figures.
- Office working: In late May, London experienced the highest rates of workplace activity so far in the pandemic, but this remains 25% lower than before the pandemic. London’s office working rates are higher than in New York City, but lower than in Paris, Berlin, and Hong Kong.
- Retail visits: These have partially recovered since the Omicron wave, but remain depressed in all cities compared to their baseline before the pandemic. In London, they remain around 23% lower than before the pandemic hit. Since February the increase in retail visits has plateaued, most likely due to a combination of higher inflation and the continued growth in online shopping.
- Airport passengers: Growth in London airport passenger numbers has been particularly sharp, rising from 37% to 74% of equivalent 2019 figures between January and April. New York’s passenger numbers have now hit the highest relative level of any of our cities throughout the pandemic, at 91% of March 2019 demand, while Hong Kong’s air passenger traffic remains close to non-existent due to continuing travel restrictions.