London LOSES its crown as the world’s top city to invest in

London has lost its top-spot position in a closely-watched global cities index compiled by asset manager Schroders.

In Schroders’ latest Global Cities Index, San Francisco secured the top spot, amid the introduction of a new venture capital score to the index. 

The US city of Boston came in second place, with London knocked down to third place in the rankings and other UK cities also falling. 

The index is based on four metrics: economic, environmental, innovation and transport. 

The innovation measure, which previously assessed the strength of universities in a city, now also monitors the amount of venture capital funding directed to businesses in a specific location. 

While San Francisco came in first place as a hub of technological innovation and Boston pipped many to the post due to its strides in biomedical innovation, many cities fared worse than usual. 

Schroders said this was because many cities had their economic prospects downgraded as the year rolled on. 

London fell from first to third place in the rankings, while Manchester slipped down 10 spots to 28th place, amid a gloomier gross domestic product outlook, dwindling household incomes and monetary tightening. London’s venture capital score was also lower than its higher ranking counterparts. 

Speaking to This is Money, Andrew Williamson, chair of the BVCA Venture Capital Committee said: ‘The UK’s Venture Capital industry has gone from strength to strength, with almost £3billion raised in 2021. 

‘This is in part thanks to the UK’s ability to attract and keep some of the best talent in the world, it’s deep pools of capital, and its business-friendly rules. 

‘To keep its crown as one of the best places to invest in Europe, the Government will need to ensure that it remains competitive, especially if we want to see even more invested in ground-breaking UK fintech or cutting-edge science.’

Top spot: The US city of San Francisco came in first place in Schroders’ latest Global Cities Index

New York and Melbourne retained their 2021 spots at fourth and fifth place respectively. Toronto, San Jose, Singapore, Hong Kong and Paris came in sixth, seventh, eighth, ninth and tenth place respectively. 

San Diageo and Berlin, were according to the data, the only two cities to enjoy any ‘meaningful’ rise up the rankings, coming in at 22nd and 30th place respectively. Both scored well when it came to venture capital funding levels and environmental policy. 

Three Chinese cities, Shenzhen, Beijing and Shanghai, and Hong Kog  reached the top 30, despite ongoing Covid-19 restrictions in 2022. 

Certain cities in India and Indonesia also rose sharply in the rankings. Cities like Mumbai, Kuala Lumpur and Jakarta benefited from an increased focus on technology and innovation, as well as highly-educated workforces, the Schroders Global Cities Index said.     

Hugo Machin, portfolio manager of Schroders Global Cities, said: ‘San Francisco’s rise to first place as well as the strong performance of a number of US West Coast cities such as Seattle and Los Angeles, may come as a surprise given the net migration towards the US’ “Sun Belt” cities that has been widely reported. 

‘However, the introduction of a venture capital score has significantly boosted their positions.’

He added: ‘Today’s index shows that, despite the impact of the pandemic and remote working, cities remain the economic drivers of the world economy. Their ability to provide collaborative spaces for work and deliver fantastic restaurants, theatre and retail experiences that cannot be replicated online. 

‘In this context cities will need to be armed with excellent transport links, affordable housing, green space and strong educational institutions to remain relevant. Furthermore, government policy will need to support the development of buildings that have excellent sustainability credentials.’