City Power

EMERGING ECONOMIES MIGHT DOMINATE GLOBAL ECONOMIC GROWTH FORECASTS, BUT TWO STUDIES SUGGEST THE WORLD’S ESTABLISHED TOP CITIES WILL CONTINUE TO DRAW THE WEALTHY FOR SOME TIME TO COME. VICKI SHIEL LOOKS AT THE NUMBERS

With the seismic shifts taking place in economies, power structures and societies around the world, a very different economic landscape is developing in which the rise of the emerging economies looks set to be a permanent feature. But what does this mean for the world’s global cities? Traditionally the likes of London and New York have reigned supreme, but will they be able to maintain their dominance in the face of growing competition?

Research by Knight Frank suggests that, for now at least, their position looks safe. This year sees the first instalment of our new-look global cities study – a sentiment survey that draws on the insight of Citi Private Bank’s wealth advisors around the world, as well as luxury property specialists from Knight Frank’s global network. The objective of the survey is to assess the importance of key cities to HNWIs, based on everything from investment potential and economic openness to their appeal as somewhere to live or visit.

According to our findings, London continues to lead the pack, coming top in virtually every category of our survey. But that could all change with emerging-economy cities such as Beijing and Shanghai rising up the ranks as places to watch over the next decade.

Here we consider the results of our survey as well as the findings of research into the competitiveness of 120 cities, conducted by the Economist Intelligence Unit (EIU) and commissioned by Citi Private Bank.

gLObAL CiTiEs suRvEy

We asked respondents to rank the most important global and regional cities to HNWIs now and in 10 years, and to pinpoint those growing most quickly in importance. We also asked them to rank cities in terms of economic activity, political power, quality of life, and knowledge and influence.

London took the pole position in almost every category. Survey respondents from all regions bar one voted it the city that matters most to their clients now. Even respondents in Asia Pacific put London and New York ahead of Hong Kong, Singapore, Shanghai and Beijing. Only respondents in Latin America disagreed, putting London in third place after New York and Miami. London and New York remain in first and second place in our league of the leading cities in 10 years’ time, suggesting it will be some time yet before their influence fades.

When asked what makes a global city, the top-scoring indicators were personal safety and security, economic openness and social stability, which is perhaps unsurprising given recent geopolitical turmoil around the globe, and goes some way to explaining London’s impressive performance. Though deemed less important, the availability of luxury housing and excellent educational opportunities, as well as the presence of other HNWIs, were also noted as key attributes – all of which London and New York have in abundance.

But for how long can London and New York retain these top spots? Beijing, Shanghai, Singapore and Hong Kong are hot on their heels in our table of the leading cities in 10 years – Beijing made it to third place in this league (a rise of six places), followed by Shanghai, Singapore and Hong Kong, knocking Paris down to seventh place.

Beijing and Shanghai also lead the list of cities growing in importance most quickly to HNWIs, followed by London, Singapore, Hong Kong and New York. This reflects the impact of the flourishing economies of the East. But is economic growth alone enough to make a city really matter to HNWIs?

Eiu gLObAL CiTy indEx

Research commissioned by Citi Private Bank from the EIU ranks the competitiveness of 120 of the world’s top cities. New York, London and Singapore top the rankings, while the highest-scoring Chinese city is Beijing.

But going only by GDP growth – one of the 31 indicators in the ranking – nine of the top 10 cities in the world are in China. The top 20 are all in China or India. And except for Doha, Lagos, Panama City, and Lima, the top 30 are all in the Asia- Pacific region.

Many of those fast-growing Chinese cities, however, performed significantly less well for freedom of expression and human rights – something that may hinder any future ascent to the top of the overall ranking. Their performance in the “global appeal” category – which considers factors such as the number of companies located there from the Fortune 500 index of the largest US companies – is also relatively poor, with just Beijing (5) and Shanghai (23) making the top 80 of the 120 cities studied.

EAsTERn PROmisE

The statistics on China’s growth are remarkable. Its luxury goods market is growing 35% annually and luxury brands such as Prada and Gucci are opening stores in cities mostly unknown outside China.

But the relative anonymity of these secondary cities could well change in the near future. Even the most conservative forecasts suggest that by 2025 China will have around 130 cities with over one million inhabitants, more than the US and Europe combined. Of those, around 90 are expected to have over five million people, while eight will be home to more than 10 million. To put this into perspective, New York is the only US city that has a population of more than five million (8.2 million in 2010).

This raft of second and third-tier cities is likely to become increasingly influential, says Jim Rogers, a US investor based in Singapore: “These secondary cities are becoming more powerful – their local governments are developing, their citizens are demanding more rights, and the cities are blossoming. If I were to choose one that will join the future list of global cities, I might choose Dalian [in north-east China], although many would say China’s next great city is Chongqing [in the south-west]. There are around 30 million people living there and a staggering amount of money is being spent on its development.”