London, Manchester and Birmingham inevitably dominated discussion among most of the 6,000 UK delegates at Mipim this year, but I took the chance to explore the wide range of continental European cities also on display.
The range of activity and ambition from European cities was impressive, demonstrating a return of confidence that had been lacking for much of the period since the eurozone sovereign debt crisis.
For example, the Grand Paris project, designed to do no less than transform the Paris metropolitan area into a major world and European metropolis for the 21st century, has the idealistic ambition to correct territorial inequalities and to build a sustainable city across the French capital. At its heart is the creation of large economic centres around Paris through the Grand Paris Express, a group of rapid-transit lines being built in the Île-de-France region and costing €35bn (£31bn).
I saw similar confidence in many German cities and in some Italian locations, such as Milan. This means that while at Aviva Investors we are optimistic about the future of cities with strong macro-economic prospects in the UK, such as London, Birmingham, Manchester and Cambridge, we also see growing investment opportunities in continental Europe as its prospects improve as well.
So here are my six continental European cities to watch, based on their credentials as knowledge-based economies with strong human capital and strength in innovation to draw upon:
- Paris stands out for the scale and diversity of its economy. It is heavily weighted towards service functions and has strong economic clusters in aerospace, IT, telecoms, biotechnology and science. At the same time, president Emmanuel Macron is already making headway in reforming French labour laws that have hampered inward investment.
- Munich is Germany’s largest and most prosperous city economy. It has robust employment growth and boasts the headquarters of Siemens, BMW, Allianz and Munich RE, while also scoring highly in terms of quality of life.
- Frankfurt has growing strengths as a business hub. It is continental Europe’s second-highest-ranking financial centre after London and scores well for knowledge-based industries.
- We also like Berlin, where since reunification in 1989 growth has been driven by the service sectors such as life sciences, IT, media, biotechnology and medical engineering. It also has one of the best start-up ecosystems in continental Europe, with rapid growth in fintech, digital health, artificial intelligence and cyber security.
- It goes without saying that a key strength for Munich, Frankfurt and Berlin is the overall German economy, where growth hit a 2.2% six-year high in 2017 and where the public finances are in a record surplus.
- Amsterdam has a strong and diverse economy, and is one of the oldest financial and trading centres in the world. It has attracted the likes of Facebook, Netflix and Salesforce, which all base their European headquarters there and, with Schiphol being the third-busiest airport in Europe, it is one of the best-connected cities on the continent.
- Dublin has seen remarkable growth in the last 25 years, despite its relatively small size, and shows no sign of slowing down. Educational establishments such as Trinity College and UCD are a key strength, as are the legal system, attractive tax system and its status in the next five years as the only English-speaking centre in the EU.
For a long-term investor like Aviva Investors Real Estate, it is important to have a strong presence not only in the UK but continental Europe as it recovers after a difficult decade. While others may be lured by the prospect of high returns in some emerging markets, for our clients who seek stable, risk-adjusted returns, Mipim 2018 proved to us that Europe is the place to be.