Why London is No.1

With the global economic downturn some would be forgiven in thinking that London has dropped down the pecking order as the leading city destination where the wealthy flock to purchase their million pound pads.

In fact it is quite the opposite according to the first World Cities Survey, which pulls together statistics and opinions from all over the world. Pioneered by Liam Bailey, head of residential research at Knight Frank, the survey illustrates London is the top city with New York a close second, both of which are likely to remain the world’s leading financial centres, but Asian cities are catching up. London takes poll position for global influence by securing top-five positions in four key ranking criteria – “economic activity”, “political power”, “knowledge & influence”, and “quality of life”.

Both London and New York have been hit hard by the credit crunch, but their networks remain largely intact and they should be able to recover from the current slump relatively well. The successful ingredients for both cities are in their acceptance of new ideas and invention, their open economies and free press and intellectual scenes – all of which bode well for the future. It will be fascinating to see locations like Shanghai and Dubai challenge this pre-eminence in the future.

After Gordon Brown’s gloomy budget and the introduction of the 50% top rate tax band, surely the global rich will go elsewhere? Not according to top agents and agents’ buyers who report that foreign buyers are extremely active. The 20 to 30 per cent price drops added to the 20 per cent decline in sterling effectively offers international buyers property at half price.

Phil Bateman from leading W1 agents Greater London Properties comments: “These are the best buying and renting conditions we have seen for decades and while the signs indicate that price drops are now steadying, this is the perfect time for buyers to take advantage.”

So how did the other cities compare in the survey? New York scores well for political power and is second only to Washington (nine) on that measure. As the EU’s official capital, while weak on economic activity, Brussels (six) scores very highly on political power but cannot offer sufficient presence on the remaining themes to eclipse Paris (three), which is in effect Europe’s second city. Los Angeles comes in at number five, with high scores for knowledge and influence.

While Hong Kong (14) scores in the top five for economic activity and knowledge and influence, its poor results in political power – where Beijing (12) takes precedence – and quality of life drag down its score. As a result, Singapore (seven) comes out ahead as the second Asian centre in our survey. One of the key insights provided by the European centres in the middle of the table – Berlin (13), Frankfurt (15), Zurich (22) and Munich (25) – is that along with Toronto (eight), these are cities that have been able to develop successful world-class economies, and at the same time provide an excellent quality of life with a high-quality public realm. With the added advantage of excellent cultural facilities, these are attractive places to live and work, and offer models for other cities to emulate.

The quality of life elements displayed with such success in Germany, Switzerland and Canada are elements that cities in the Middle East and Asia are working hard to compete directly on. Despite significant investment, Dubai (28) struggles to score well on this measure, however Knight Frank expect the city to climb further in the future. The crux of the matter for many cities in emerging economies is that while they have benefited from government investment in infrastructure and facilities, issues surrounding personal freedoms and safety, as well as broader political tension, remain stumbling blocks to their development as world cities.

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