There has never been a better time to invest in London

21-May-2009

With London office rents down by up to 50%, sterling depreciation of 18% against the dollar in the last 12 months, and an even richer talent pool available, the global recession has opened a window of investment opportunity in London.

Amidst first predictions that this window may close sooner than expected, Mark Davies, Marketing Director of Think London, the official foreign direct investment agency for London, outlines why there has never been a better time for foreign companies to set up and grow in London.  

Balancing cost and returns has always been an important consideration for any company looking to expand its business overseas, no matter what the economic climate. London, as a premium offering with high perceived returns on investment*, has been ranging at the upper end of the scale.

Now, sterling’s depreciation against most major currencies in the last seven months – over 27% against the dollar and more than 15% against the euro – has made already lower property and support services available at a level representing outstanding value. The average price of London office real estate declined to 8,020 euros per square meter last quarter, from more than 22,500 euros in mid-2007, according to CB Richard Ellis Group Inc., the biggest commercial property broker.

By contrast, Paris rates fell to 12,480 euros from about 24,000 euros. Many of the prospective inward investors in London we speak with, most recently companies from China and Korea, have recognised this and want to ensure they are the forerunners in the race for growth during the economic recovery period. Only a few weeks ago, our client Canon Europe announced plans to move to a new headquarters in London, with key departments moving to London from Canon Europa N.V. in Amstelveen. 

So, London now offers foreign investors real value for money. But there is more to this opportunity than just lower costs – it’s the chance for businesses to innovate and grow.

We are all aware that the available talent pool in London has widened and deepened, with lots of highly qualified people ready to take on new challenges. More and more companies are recognising that this is the time to inject fresh talent into their business.

It is important to remember, that London is one of the biggest city economies in the world. London has a huge economic opportunity in the 2012 Olympic and Paralympic Games. TheThames Gateway, which includes the site for the 2012 Games, is the largest regeneration project in Europe, including significant private and public sector investment. Despite the economic downturn, the 2012 Games expects to have around 7,000 direct contracts which, together with its suppliers, will form supply chains of around 75,000 related contracts.

Furthermore, there is an additional £40 billion of confirmed development projects across the UK’s capital. Projects such as Crossrail, the Kings Cross regeneration and the London Tideway Tunnels are not only creating jobs in London, but also opportunities for businesses.

So when will this window of opportunity close for overseas businesses?

It is very difficult to predict whether we have in fact reached the bottom of the downturn. Many investors and experts in the financial services industry believe that it won’t be long before the pound bounces back and a number are expecting to see a rise in its value within the year. There are also a number of reports that the UK commercial property market is looking more attractive for long-term investors, suggesting that perhaps the worst of the property downturn is over. All in all, the message is simple: Now is the time for businesses to take advantage of the opportunities on offer, before the window closes for good.

We at Think London help overseas companies to set up business in London and to take advantage of the opportunities London offers to their sectors. Think London's services are becoming even more valuable in the current economic environment. We provide support for international businesses and expertise about the world’s most dynamic market in each phase of their business’ growth.

We also provide an exclusive offer for all Think London clients.  As part of the Mayor of London's economic revocery action plan we have launched Touchdown London, which  is a start-up service dedicated to overseas businesses who wish to establish themselves in London. It has been created, and is managed, by Think London, and is offered exclusively to Think London clients. It is hosted by Avanta, the serviced office provider.

You can get down to business immediately with our offer of a free desk for up to 12 months* at our Touchdown London centres in the City, central and west London, and a subsequent 25% rent discount. If you would like to find out more about setting up business in London, or Touchdown London, please contact Think London today.  Our services are free and confidential and open to your business.

* Creating Sustainable Growth in Europe: Where India and US businesses get the most out of globalisation’, Think London, 2007, based on independent research by Penn, Schoen & Berland

About Think London
Think London is the foreign direct investment agency for London, assisting companies moving to the UK capital by offering access to business networks , people and opportunities . Think London is a not-for-profit, private-public partnership delivering expertise and advice to international businesses. The agency’s service is completely free, comprehensive and confidential. Think London’s experts work with government and the business community to help companies access the best people, places and opportunities in the city. Think London’s principal funding partners are the London Development Agency (LDA) and our network of commercial partners . Other key partners are the City of London Corporation , which also provides funding, UK Trade & Investment and the business community through London First .