Insight 1:
London: Leading in the Age of Volatility
A year ago, we suggested that London's future as a top global city relies on more than its traditional strengths. Facing competition from tech hubs like Singapore and finance capitals like New York, as well as decentralised work trends, we identified new advantages necessary for success. These include attracting high-quality talent, leading in sectors like finance and AI, and securing venture capital to support growth industries. It's about resilience, renewal, and reinvention. Like many, we also anticipated uncertain politics, volatile markets, and challenging economics. Suffice to say, fate delivered fulsomely on those dynamics. This affords us a rigorous proving ground for our thesis so far, as well a chance to look ahead to London’s opportunities in the second half of the decade.
Resilience
London’s resilience is evident in the numbers. GVA rose by 1.1% in 2024, with Oxford Economics forecasting 2% annual growth through the decade, driven by key sector performance. Employment grew 1.8% by mid-2024, outpacing the UK's 1.4%, while self-employment surged 5.4%. Since the pandemic, London’s workforce has expanded by nearly 10%, compared to 4% nationally—bolstering demand for office space.
Globally, geopolitical tensions remain high. Uncertainty in French and German politics, Syria's leadership collapse, a coup attempt in Seoul, and a new Trump presidency highlight ongoing instability. In contrast, London—under its 696th Lord Mayor—continues to offer stability few cities can match.
Renewal
Heathrow hit record passenger numbers in August 2024, reviving the airport expansion debate. Takeover activity surged, with annual deal values up 66% in the first half of 2024, according to PwC. The year ended with a $1bn acquisition of Learning Technologies Group by a US private equity firm—reinforcing London's appeal to global investors.
London also remains a magnet for venture capital. It ranks third globally, behind San Francisco and New York, with over £10bn in VC investments in 2024 alone.
Reinvention
London's financial services sector, despite its dominance, faces new challenges. Ranked as the world’s second-leading financial hub since 2020, it has yet to see any serious European competition post-Brexit. However, stock market activity has declined, with fewer listings and reduced capital raises. UK pension funds have redirected investments abroad, limiting local capital flows. Some also argue that post-GFC regulations have stifled the sector’s growth potential.
These issues are now being addressed through new policy, messaged via a combination of recent consultations, papers, and the November 2024 Mansion House Speech. If implemented successfully, a new collection of measures could both meaningfully reinforce and enhance London’s standing as a financial centre. Some of the key measures and policies to watch in 2025 include, the promotion of financial services as an economic sect, the launch of new equity markets, the evolution of the pensions landscape, and a drive to deregulate.
The effectiveness of such measures will take time to assess. However, the impact of a rejuvenated financial sector on real estate markets would be felt both directly, for example, through demand for business space as the sector expands, and indirectly, for example, through deepening capital markets.
Image 1 A meeting of minds. Queen’s Square London - once the academic home of two pioneers in AI: Geoffrey Hinton, 2024 winner of the Nobel Prize in Physics, and Sir Demis Hassabis, cofounder of Google Deepmind and winner of the 2024 Nobel Prize in Chemistry.
Resilience
London’s resilience is evident in the numbers. GVA rose by 1.1% in 2024, with Oxford Economics forecasting 2% annual growth through the decade, driven by key sector performance. Employment grew 1.8% by mid-2024, outpacing the UK's 1.4%, while self-employment surged 5.4%. Since the pandemic, London’s workforce has expanded by nearly 10%, compared to 4% nationally—bolstering demand for office space.
Globally, geopolitical tensions remain high. Uncertainty in French and German politics, Syria's leadership collapse, a coup attempt in Seoul, and a new Trump presidency highlight ongoing instability. In contrast, London—under its 696th Lord Mayor—continues to offer stability few cities can match.
Renewal
Heathrow hit record passenger numbers in August 2024, reviving the airport expansion debate. Takeover activity surged, with annual deal values up 66% in the first half of 2024, according to PwC. The year ended with a $1bn acquisition of Learning Technologies Group by a US private equity firm—reinforcing London's appeal to global investors.
London also remains a magnet for venture capital. It ranks third globally, behind San Francisco and New York, with over £10bn in VC investments in 2024 alone.
Reinvention
London's financial services sector, despite its dominance, faces new challenges. Ranked as the world’s second-leading financial hub since 2020, it has yet to see any serious European competition post-Brexit. However, stock market activity has declined, with fewer listings and reduced capital raises. UK pension funds have redirected investments abroad, limiting local capital flows. Some also argue that post-GFC regulations have stifled the sector’s growth potential.
These issues are now being addressed through new policy, messaged via a combination of recent consultations, papers, and the November 2024 Mansion House Speech. If implemented successfully, a new collection of measures could both meaningfully reinforce and enhance London’s standing as a financial centre. Some of the key measures and policies to watch in 2025 include, the promotion of financial services as an economic sect, the launch of new equity markets, the evolution of the pensions landscape, and a drive to deregulate.
The effectiveness of such measures will take time to assess. However, the impact of a rejuvenated financial sector on real estate markets would be felt both directly, for example, through demand for business space as the sector expands, and indirectly, for example, through deepening capital markets.
Image 1 A meeting of minds. Queen’s Square London - once the academic home of two pioneers in AI: Geoffrey Hinton, 2024 winner of the Nobel Prize in Physics, and Sir Demis Hassabis, cofounder of Google Deepmind and winner of the 2024 Nobel Prize in Chemistry.
Voices of Reason
To gain a different perspective on London’s appeal, we undertook a number of structured interviews with key clients in the financial services, venture capital, and technology spaces. In many cases, the individuals had the opportunity to locate in a variety of global cities, but had chosen London. More detail can be found in our full paper, but some of their key considerations included:
- London’s Unique Business Appeal: a function of historical significance, robust financial ecosystem, and exceptional talent pool.
- The Ability to Balance Costs and Benefits: respondents emphasized that many cheaper locations often fall at the first hurdle by not offering direct flights to other global cities, for example.
- Challenges on the Horizon: geopolitical risks, international competition, and adapting to evolving work-life expectations.
Post-Brexit, London faces the task of redefining its global narrative. Interviewees called for a shift from perceived isolation to positioning London as fiercely independent yet deeply connected to international markets.
My London
The capital’s appeal through the eyes of Prof. Kerensa Jennings, non-executive director and technology specialist.
Prof. Kerensa Jennings is a Non-Executive Adviser on the Executive Board at Knight Frank, with extensive experience in governance, technology, and digital transformation. Having held senior roles, including Director of Data Platforms at BT Group and CEO of a digital social enterprise for the Royal Household, she brings valuable insights into London's role as a global business hub. Emi Demaliaj, analyst in Knight Frank’s London research team, sat down with Kerensa to uncover a personal take on London’s success. The interview can be found in the full paper.
Emi Demaliaj: As a leader and advisor, why do you feel London remains a preferred business destination?
Prof. Kerensa Jennings: London's status as a premier business destination is rooted in its progressive ethos, cultural vibrancy, and dedication to inclusivity. The city's commitment to empowering women is exemplified by initiatives such as Edwina Dunn's The Female Lead, which celebrates the achievements of women across industries and provides vital role models for aspiring entrepreneurs. Elena Milla's Noon platform further enhances this reputation by supporting midlife women in pivoting their careers, fostering a resurgence of talent.
Prof. Kerensa Jennings
Non-Executive Adviser. Knight Frank Executive Board
Outlook
London began the first half of this decade with a disproportionate share of challenges – some of a domestic making, some global in nature. Having weathered this turbulence, and emerged not only intact, but with a stronger and more diverse business make up, the second half of the decade sees the capital on the cusp of a periodic upswing. But London’s long term relevance isn’t guaranteed—it must be earned.
Real estate’s role within this growth story is vital – at it’s best, the enabler of collaboration, at a human scale, in a city that has made that it’s USP.
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