Cities as Investment Migration Magnets
In the post-pandemic landscape, international companies face new choices about where to locate headquarters, executives, and employees. All the key metrics of the past are in flux. Corporate tax arbitrage, for example, is coming under fire, and a proposed new global flat tax will change the pecking order of advantageous jurisdictions. Then there is remote work: According to the International Data Corporation, at least 40% of the global workforce is location independent, and many companies are under pressure from employees to maintain remote work indefinitely.
One conventional wisdom during the pandemic has been the ‘death of the city’, but it has been wrong on two counts. First, it prematurely scorned the demise of New York, San Francisco, and London — yet the world’s leading commercial centers have bounced back as Covid subsides and rental prices fall. Second, it spoke of ‘the city’ as if only today’s top-tier metropoles are to be counted. But there are dozens of cities vying for residents in the competition for the physical investment of individuals and families. Today, Hong Kong’s loss is Singapore’s gain. In Europe, the combination of remote work and lower cost of living have breathed new life into Athens and Lisbon.
Cities that tick all the boxes will attract the world’s best and brightest
As I argue in my new book MOVE, coming out of the Great Lockdown, we are headed for the next Great Migration. But where will those with means go? Technological connectivity is creating new vectors of mobility for millions of people. Though we are evolving towards a world in which ever more work is conducted in the cloud, management and employees still have to be somewhere, and given the diverse risks businesses face, from pandemics to conflict to climate change, they must think very carefully about where to expand or relocate, seeking hubs that offer a high degree of reliability in their capacity for business continuity under diverse scenarios.
To become a place that remote workers want to call home among the many options requires a holistic set of virtues. Henley & Partners’ new Best Residence by Investment Cities for Business Index uses a wide range of metrics to score the overall quality of life in world-class cities that offer residence by investment programs: Covid safety, general law and order, tax rates, education quality, healthcare, dynamic property markets, lifestyle offerings, and others. Sustainable infrastructure that mitigates climate risk is another sensible consideration. Yet another is attractiveness to young entrepreneurs who form the backbone of the services economy and innovative class. At a time when nations are plagued by great disparities in wealth and culture, this focus on leading cities rather than countries is very welcome.
Europe’s abiding appeal persists
The data presents a very nuanced contrast between cities ranking high in overall health resilience versus their ease of access to investor migrants. For example, New York and London score very well in economic performance and overall quality of life, but are less investor friendly than Zurich, Vienna, Singapore, or Lisbon. Not surprisingly, European cities generally top the tables. As I explain in MOVE, Europe’s latitude and social policy give it an edge among regions of the world seeking the status of climate oases.
Highly regarded global cities have an opportunity to reinforce their position. London, for example, must stabilize its EU relations, maintain robust international connectivity, and rebrand itself as an affordable magnet for entrepreneurial talent beyond finance. Singapore will need to add more flexibility to its access policies for employment pass holders who are not yet permanent residents, and quickly, eliminating their excess wait time to return to the country. Zurich is a global city that has both demonstrated deft handling of Covid and maintained its openness to the many global networks of which it is part. Dubai has used the pandemic to liberate many foreigners from legal and cultural restrictions in the legal and personal spheres, and the UAE’s improved relations with Israel as well as the deterioration of conditions from Lebanon to India generally push talent into its property markets.
Flexible, connected cities will prosper
In general, countries that allow fluidity among tiers of residency will benefit from the assurance such flexibility provides. That is because we are more likely to change locations multiple times, or shuttle across them, than to simply choose one new final destination and settle there. Those who can afford to be on the move perpetually are becoming a new class of, to borrow a term from physics, “quantum people”.
As they often have been throughout history, cities can be islands of immunity amid a sea of uncertainty. Whereas entire island nations such as Australia and New Zealand have sought to maintain that status by closing themselves off, global cities must prove that they can offer the blend of secure connectedness that global companies and mobile workers seek.
The next chapter in the war for talent is being written today not only by the great cities that are reinventing themselves, but also by the cities seen as most attractive by the Generation-X, millennial, and Generation-Z digital nomads who dominate the workforce. Where they take their skills and savings will play a significant role in determining the winners and losers of the future. Cities such as Tbilisi and Almaty are under the radar today, but already show strong signs of putting themselves on the map for the long term as they swell with industrious and talented youth. As countries learn from the Covid experience and improve their living conditions to lure from the next wave of investor migrants, the options for the future may well grow rather than recede.
This article first appeared in Henley & Partners’ Best Residence by Investment Cities for Business Index.