Savills Tech Cities index measures 30 cities from around the world against 100 individual metrics, ranging from the volume of inward venture capital investment through to the cost of a flat white coffee, to establish which cities are the most successful homes for tech and start-up companies.
The group noted that tech cities are important centres for tech in their region and VC investment hotspots. “Vibrant cities in which to live and work, they are magnets for talent,” it said.
The Savills Tech Cities index measures what makes them successful. The report noted that GDP across the 30 Tech Cities is forecast to rise by 36% in the next decade, against a rate of 19% across other developed cities.
New York has emerged as the premier Tech City in this year’s index, overtaking San Francisco. Cape Town ranked 30th on the list. Access to a deep talent pool and the city’s reputation as a global centre of commerce makes New York the global leader, Savills said.
Chinese Tech Cities now account for a higher share of VC investment than their US counterparts. Beijing recorded an average $34 billion of VC p.a. in the last three years, volumes higher even than New York and San Francisco.
The Savills Tech Cities index measures what makes a successful Tech City. These metrics are grouped into six categories: business environment, tech environment, city buzz & wellness, talent pool, real estate costs, and mobility. Each category is weighted to reflect its importance to the tech sector.
The expansion of coworking has gone hand in hand with the growth of the global tech sector, Savills said.
“Coworking providers accounted for 13% and 13.5% of office market take-up in London and Dublin respectively in the first nine months of 2018. The sector is rising fast globally, but there is room for growth. Even in US markets such as Manhattan, total coworking space is estimated at just 2% of total office stock.”
Private offices, offering the benefits of coworking (flexible leases, amenity provision), but with individual space for the occupier, is the coworking subsector rising fastest.
Costs are highest in San Francisco where the supply/ demand imbalance is most acute. Some markets appear good value by comparison, notably Amsterdam, at $380 per month.
Savills noted that mainstream residential rents matter because they are a factor in where young talent decides to settle.
In San Francisco residential rents have grown faster than capital values in the last decade, in spite of rent controls, and are the highest of our Tech Cities at $720 per week. New York is more expensive for real estate costs overall, but renters have more affordable, but still commutable, options in the outer boroughs.
Several European centres compare favourably. Barcelona ($250 per week) and Berlin ($200 per week) offer relatively affordable rental accommodation. Cape Town ranks favourably, at $280 per week.