Real Estate Investor Magazine South Africa July 2014 | Page 53

OFFSHORE
When looking at capital investment at a global level
it is clear that what is driving London’s growth is not
what is happening in the UK, but rather elsewhere in
the world. It is also quite clear that it has broken free
from the constraints of UK growth and is setting
the pace for national economic growth rather than
following it.
London accounts for 19% of jobs, 21% of businesses,
and a full quarter of the economic output for the entire
United Kingdom. According to a new report released
by the Centre for Economics and Business Research,
London’s economy is set to expand by 15% over the
next f ive years to 2019. It predicts that London’s
booming economy will account for almost one third of
all UK growth over the period, thanks to a surge in
construction activity and financial services.

“The growing demand to live and
work in London is creating attractive
opportunities for investors”
The CEBR has forecast that London’s economy will
grow by 4.2% in 2014, slowing down to 3.4% in 2015.
Only the South East, which is firmly within London’s
orbit, will see growth levels getting close to London.
By contrast, Northern Ireland and the north east of
England will see the lowest economic growth of any
part of the country: both regions can expect their
economies to expand by 2.1% in 2014 and 1.7% in
2015. For Scotland, which could vote to become an
independent country in September, the CEBR has
pencilled in growth rates of 2.4% and 2.1% respectively.
The capital’s prosperity is built on construction and
financial services, with banks and other firms offering
business services expected to create nearly 100,000 jobs
in the next five years.
However, London’s employment recovery is slowburning. The CEBR expects the unemployment rate to
stand at 7.6% for the year as a whole, still higher than it
was before the financial crisis took hold in 2008.
London’s dominant economic role within the UK is
of course nothing new. In fact it has been the source of
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controversy for decades, if not centuries. All the way
back in 1940, an official royal report stated that the city
“acts as a continual drain on the rest of the country both
for industry and population, and much evidence points
to the fact that it is already too large.”

Growth continues
And yet, London is still growing. The Office for
National Statistics predicts that London’s population
will top 10 million within 15 years as a soaring birth
rate takes the number of people living in the capital
to a record high. London’s population, which was last
measured at 8.3 million, is set to rise by 13% over the
next decade to hit nearly 9.4 million by 2022.
That will add the equivalent of the whole of
Birmingham to London’s population and send the total
well past the previous record for the capital registered
in 1951. And if the rapid growth continues, London’s
population will rise further to hit a new peak of just
over 10 million in 2029.
The growing demand to live and work in London is
creating attractive opportunities for investors offering
even greater scale and opportunity for return.

RESOURCES

Smuts & Taylor Ltd
July 2014 SA Real Estate Investor

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