News and Events > UK cities resilient to Brexit uncertainty due to strength of service sector

UK cities resilient to Brexit uncertainty due to strength of service sector

October 7, 2019

London tops Index for 11th time since 2000 Almost all cities in the UK improve in this year’s ranking Manchester overtakes Edinburgh to be the second-highest ranked UK city

For the third year running and the 11th time since 2000, London has retained the top spot on the European Regional Economic Growth Index (“E-REGI”), published today by LaSalle Investment Management (“LaSalle”), the global real estate investment manager. The Index recognises London’s medium-term economic growth prospects as the best in Europe and shows that despite Brexit uncertainty, the UK capital remains the continent’s leading market for future real estate occupier demand.

The E-REGI Index attaches a score to each European region based on its medium-term economic growth prospects, its level of human capital and wealth and the quality of the business environment, relative to the European average. Almost all UK cities improved in the ranking, with Manchester (33rd), Glasgow (51st) and Liverpool (58th) all rising more than 15 spots compared to other cities in Europe. This can be mainly attributed to an improved service employment outlook – for example, in Manchester strong expected employment growth in professional activities and administrative & support service activities has contributed significantly to the city overtaking Edinburgh (34th) as the second-highest ranked UK city. 

Despite many of the UK’s cities closing the gap on the capital, London also improved its relative score and even extended its lead on Paris in second place, again primarily due to a more positive service employment outlook compared to last year. The ranking is based on an assumption that the UK will exit the EU with a deal by March 2020 and remain in a customs union with the EU for an extended period. LaSalle recognises that a no-deal Brexit would negatively impact the rankings of the UK’s cities, with London most exposed.

Simon Marx, Director of Research & Strategy at LaSalle said: “Much has changed during the 20-year history of the E-REGI Index, but London has always held a spot close to the top of the Index, despite numerous economic challenges in the past two decades, from the dotcom crash to the global financial crisis. While the outcome of Brexit will clearly have a significant impact on London’s ranking, the city has showed tremendous resilience over the last two decades and remains unparalleled in Europe in terms of the scale, flexibility and diversity of its workforce and skills base.”

He added: “The E-REGI Index identifies the European regions and cities with the best economic growth prospects, which when combined with detailed real estate knowledge, supply-side information and relative pricing has proved to be a valuable tool for portfolio construction, determining real estate market outperformance and investment strategy throughout its 20 year history.”

Other highlights of LaSalle’s 2019 E-REGI Index:

  • Paris sits in second position for a third consecutive year, experiencing its highest score ever. The French capital leads the LaSalle European Human Capital Index, which drives part of the E-REGI Index score.
  • Dublin falls into the late cycle category, whereby certain cities have peaked in their economic cycles, and suffers from lower growth prospects over the new forecast period 2019-23. As a result, Dublin fell three places but retained its top 10 status in 9th position.
  • Amsterdam continued its upward trajectory to reach 16th position, its highest rank since 2006. The large concentration of high value-added sectors adds to the city’s higher-than-average productivity, while the city’s vibrant quality of life attracts foreign talent and tech start-ups, driving competitiveness further.
  • Nordic cities continue to feature in the top-end of the ranking due to strong human capital and wealth scores, with three in the top ten (Stockholm, Oslo and Copenhagen-Malmö).
  • Istanbul replaces Stockholm in third place thanks to strong GDP and employment scores, and it has also seen a large improvement in its employment growth prospects and human capital.
  • German cities were generally slightly weaker in the Index as a struggling industrial sector amid weak global trade and elevated uncertainty weakened the country’s economic overall outlook, with only Munich (5th) remaining in the top 10.
  • Of all European cities, Bucharest, a popular IT outsourcing location, and Moscow, whose employment prospects have been boosted by pension reform, made the most progress in the ranking this year, jumping to 45th (+40) and 49th (+48) respectively.

Looking ahead, there are also factors which are not currently captured by the E-REGI Index and that are becoming increasingly important to the success and ultimately real estate performance of cities. Factors such as sustainability, urban density, liveability and wellbeing, climate change resilience and accessibility are becoming increasingly important and data availability enabling the measurement and comparability of these factors across geographies is improving. Looking ahead at the next 20 years the E-REGI Index will attempt to systematically capture features such as environmental quality including air quality, housing affordability, the quality of transport, the quality of social infrastructure, the presence of innovation industries and the widespread lack of mixed-use assets.

About LaSalle Investment Management

LaSalle Investment Management is one of the world’s leading real estate investment managers. On a global basis, we manage approximately $77 billion of assets in private equity, debt and public real estate investments as of Q4 2021. The firm sponsors a complete range of investment vehicles including open- and closed-end funds, separate accounts and indirect investments. Our diverse client base includes public and private pension funds, insurance companies, governments, corporations, endowments and private individuals from across the globe. For more information please visit and LinkedIn.

NOTE: This information discussed above is based on the market analysis and expectations of LaSalle and should not be relied upon by the reader as research or investment advice regarding LaSalle funds or any issuer or security in particular. The information presented herein is for illustrative and educational purposes and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy in any jurisdiction where prohibited by law or where contrary to local law or regulation. Any such offer to invest, if made, will only be made to certain qualified investors by means of a private placement memorandum or applicable offering document and in accordance with applicable laws and regulations. Past performance is not indicative of future results, nor should any statements herein be construed as a prediction or guarantee of future results.

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