The rise of remote working, coupled with the multiple lockdowns that forced so many retail, leisure and hospitality venues to close, crushing the life and soul of central London. Streets were abandoned as if in some post-apocalyptic vision of the planet.
Such scenes have naturally led to claims that the appeal of living in cities––and particularly in London––has died out. There have been countless headlines proclaiming an exodus from the capital, with suggestions that more and more people will instead favour rural living from now on.
Indeed, throughout the pandemic, there has been a tendency to extrapolate short-term trends and suggest they are indicative of a “new normal”. For me, the claims that the capital is losing its draw as a place to live, work and study is a prime example of this. And they are claims we should be wary of paying too much attention to.
The bigger picture
The threat of Covid-19 has resulted in unprecedented state involvement in our day-to-day lives. Consumers and businesses have had many of their actions dictated to them throughout the pandemic, with free choice largely limited. To make bold predictions, therefore, about what life will look like when state sanctions are fully lifted and the threat of the virus abates is extremely difficult.
However, when looking to London’s position as a place that people gravitate towards, we can start by examining the long-term trends––the ones that have not been shaped purely by the unique circumstances of the past 18 months.
For instance, it is overly simplistic to state that people are only now starting to leave London, and that there is a one-way direction of travel within no one moving to the city. Rather, there is––as has long been the case––a constant flow of people both leaving and moving to London in their droves.
In fact, between 2009 and 2019, it is estimated that about 550,000 more Britons left London than moved to it. However, crucially, the population grew in this period thanks to both the higher birth rate within the Greater London area, and net migration to the city.
Quite naturally, people leave London for a number of reasons. Be it to do with their careers, their families, the affordability of property and cost of living, or simply wanting to move to new surroundings. The rise of remote working, combined with the increased demand for properties that have gardens or spare rooms that can be home offices, might have contributed to more people considering life outside of London during the pandemic, but the data shows us that the increase is only very slight.
Figures released by estate agent Hamptons show that London leavers purchased 73,950 homes outside the capital in 2020. Although this is slightly higher than the past four years, is not striking. The table above highlights that in spite of all that has been said, it was largely in keeping with annual averages.
The draw of being in London remains strong
Too often, the media coverage around this trend has focused on the seemingly large figures showing how many people are leaving the capital. “Almost 74,000 Londoners buy homes elsewhere”, or “Half a million Britons abandon the capital in the past decade”. The reality, when the numbers are viewed in context, is that this is purely part of the natural movements of people in and out of any city.
In truth, London’s appeal remains intact. Certainly, our experience at Butterfield is that clients who own properties in prime central London (PCL) are showing no interest in leaving, but rather are interested in investing further in this market, with the view that the city will be springing back to life in the coming months, therefore attracting many more new renters and buyers.
More generally, even as remote working is likely to become more commonplace, we cannot overlook the fact that London remains home to more than 1.1 million private businesses, as well as being home to many more private and third sector jobs. The professional motivations for being in London have not been dented in any meaningful way by the pandemic.
In a recent interview, Tom Walker, a Schroders fund manager specialising in global cities, said: “The media is focussing on the people who are moving “away” from the city and not on those who are moving to the city, especially younger people. So far, the data is telling us that those that are moving away are not moving very far, only to the suburbs. People understand that they cannot be too far from the city, both from a professional and personal point of view.”
Recent stories underline this message. For example, London recently recovered its place as Europe’s leading trading hub, while the latest Global Financial Centres Index ranked the city as the second-best financial centre in the world, behind New York.
Further, London boasts several world-leading universities (four in the top 50). Add to this its transparent legal system and strong tradition of rule of law. Then, of course, there are the thousands of cultural sites and activities, as well as the hospitality and leisure venues on offer.
Property investment in London
London’s appeal is, of course, built upon hundreds of years of growth and evolution, which has made it the huge multi-cultural hub we see today. In turn, it has long been established as a global property investment hot spot.
Research by Astons, the international experts on real estate, residency and citizenship through investment, has underlined that London remains one of the prime global real estate markets, based on the price per square foot of properties in PCL. Meanwhile, figures from Benham and Reeves have found that buyer interest in London’s £2 million-and-above properties have risen throughout 2021.
Again, such data is indicative of London’s lasting appeal, pandemic or no pandemic. There is a long list of reasons that it lures in people from around the globe, and in my mind, those claiming this appeal has dissipated in such a short space of time are being far too reactive in their predictions.
