London’s property market resilience to the vicissitudes of Covid-19 have placed the UK capital at the top of European investment rankings followed by Paris, Berlin, Stockholm and Frankfurt.
While the exact magnitude of Covid-19 and its effect on the real estate investment market remains uncertain, some European cities are already emerging as more resilient than others, according to Savills latest research report.
The report assessed six structural metrics underpinning this guidance: the stringency of lockdown measures, economic dependence on tourism and retail sectors, GDP growth, market liquidity, investment characteristics and resilience to the past Great Financial Crisis.
For instance, according to the Covid-19 Government Response Stringency Index, from the University of Oxford, the stringency level in the UK between 8th April 2020 and 8th July 2020 was 75.83, as opposed to Sweden’s 46.3. This included measures such as income support and debt/contract relief, which have left both countries well placed to attract significant capital investments as consumer purchasing power remain high whilst these markets reopen.
With regards to economic reliance on tourism, the contribution of tourism to the UK’s GDP (11 per cent) is competitive amongst European equivalents such as Italy (13 per cent) and Spain (15 per cent), according to the latest 2018 WTTC data. A lower percentage of economic activity dependent on tourism enables greater stability, and a more expedient bounce back, from the pandemic - hence attracting investment funds.
Liquidity in London specifically is a significant advantage. Throughout the lockdown, foreign capital inflows have been unencumbered as a result of long-established office networks. Most international funds and fund managers with European interests have offices based in London. These significant cross-border networks enable the efficient capitalisation of investor appetites as markets recover.
While the exact magnitude of Covid-19 and its effect on the real estate investment market remains uncertain, some European cities are already emerging as more resilient than others, according to Savills latest research report, with London coming out on top. Other cities in Savills Top Five include Paris, Berlin, Stockholm and Frankfurt.