2005 Rankings Report
London, Paris, and Frankfurt Top List of Best European Cities for Business
Cushman & Wakefield Healey & Baker survey reveals competition from Asia likely to have greatest impact on business.
Nearly a fifth of companies (18%) plan to relocate or outsource their European activities to another country over the next two years, with Central and Eastern Europe being the favored destination, and India and China the top destinations outside Europe, according to European Cities Monitor (ECM), an annual survey conducted by Cushman & Wakefield Healey & Baker (C&W/H&B) since 1990.
Source: European Cities Monitor (ECM) Survey; Cushman & Wakefield Healey & Baker
ECM is based on interviews with senior managers and board directors at 500 of Europe’s top companies. It looks at issues regarded as important by companies when deciding where to locate, and then compares how Europe’s leading business cities perform on each of those issues.
“The corporate world of the 21st century is mobile,” says David Hutchings of C&W/H&B, which operates the European division of global property consultant Cushman & Wakefield. “The cities of Europe need to be aware of this, and need to create more favorable conditions just to hold on to existing investment—let alone to attract new investment.”
A total of 26% of companies have already outsourced European activities, with Central and Eastern Europe the most favored destinations.
“Companies are attracted by the proximity of Central and Eastern Europe [to the rest of Europe], the region’s relatively low cost of office space, and a skilled and relatively low-cost labor force,” explains Hutchings.
After many countries in the Central and Eastern Europe region joined the European Union (EU) earlier this year, European-based companies began looking at the region as an outsourcing destination, and also as a place to open offices. According to the survey, Warsaw is the city that can expect the biggest influx of companies over the next five years, followed by Moscow, Prague, and Budapest. In Western Europe, Paris earned the top spot.
“The tendency to open offices in Central and Eastern Europe will continue for a few years yet,” says Hutchings. “EU membership of countries including Hungary, Czech Republic, and Poland has meant however a spread in focus to the countries further east, such as the region’s largest country, Russia, as companies search for new low-cost production areas and new markets. The only cloud on the horizon for these cities could be the advance of Asia with its even lower cost base.”
Outside Europe (and with the exception of New York City) the list of favored cities for opening an office over the next five years is dominated by Chinese and Indian cities. Shanghai is the top choice, followed by Beijing, New York City, and New Delhi.
For the first time in the survey, “competition from Asia”’ was cited as the factor likely to have the greatest impact on business over the next 10 years, having overtaken the two other top factors—the enlargement of the EU and the performance of the U.S. economy.
“Asia has two of the world’s fastest growing economies, China and India, with a combined population that accounts for more than one in three people on the planet,” explains Hutchings. “Companies from around the world are setting up in these two economies, attracted by the low costs and increasingly skilled labor forces, and also to capture market share as the economies open up and develop at a rapid pace.”
