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Why Global Businesses are Choosing the UK Regional Cities

Global Businesses are Choosing the UKs Silicon Valley

The success of the London Commuter Belt (and by extension, the UK tech sector) is underpinned by the global brands it’s comprised of. As the UK’s ‘Silicon Valley’ experiences unprecedented growth and inward investment, it’s attracting huge companies that want to take advantage of the supporting infrastructure. As we see global businesses choosing the UK regional cities and boosting towns near London, we’re seeing overseas investors showing more interest in these emerging markets, particularly from India. 

As technology advances, businesses have more opportunity to be discerning in where they’re based. UK businesses that were previously tied to London can now look to regional cores such as Birmingham or emerging markets such as the UK’s Silicon Valley or London Commuter Belt.

With a history rooted in the UK technology sector, the M4 corridor – widely known as the UK’s Silicon Valley – is a natural fit for digital businesses that want to relocate. Home to global brands including Microsoft, IBM, Huawei and Oracle, it’s a region with strong commercial foundations and the infrastructure to match. You’d be surprised at the businesses that share links to both the UK and India respectively. Dell and Vodafone, for example, are both based in Bracknell and have headquarters in Chennai and Mumbai respectively.

This increasingly affects Foreign Direct Investment (FDI). The level of Indian investment into the UK increased by 255% between 2017 and 2018, while the number of Indian investors choosing the UK increased to over 800 in the same period.

Slough, a town around an hour away from London and a key commuter destination for workers in the city, has the largest trading estate under single ownership with over 5,400 businesses. A thriving commercial hub, Slough is ensuring that young professionals are attracted to the opportunities and accessibility on offer but can still provide close links with the capital.

For international investors from countries such as India and the UAE, these more ‘unknown’ investment markets are offering much higher potential returns than the traditionally popular London market – using increased tenant demand to deliver much more effective yields. Uncertainty in the market is also presenting the opportunity for overseas investors to find value through favourable foreign exchange rates.

Location

Thanks to its positioning within the London Commuter Belt, the UK’s Silicon Valley benefits from incredible accessibility via high-quality transport links while inward investment ensures world-class connectivity.

Tech hubs such as Bracknell and Reading are under an hour away from the capital, providing opportunities for local professionals as well as commuters from London. For renters that want a more affordable alternative to the capital, these towns are more appealing when compared to the expensive London market. 

It’s this ability to serve wider demand that makes the London Commuter Belt such a prospect for high-tech business. With a broad range of customers and partners accessible from the region, it’s an ideal location for businesses that want UK headquarters with room to grow.

Affordability is also huge for many businesses. While the average price per sq.ft in London can reach over £1,000 for central postcodes, towns such as Bracknell can be as low as £350 – £400 per sq.ft. This reduces overheads, opening up more money for use elsewhere. 

Professional Demand

The opportunities afforded by hosting such a variety of top businesses means the London Commuter Belt has built an ambitious and dedicated workforce. Nearly 80% of the UK’s Silicon Valley is in active employment – outstripping the national average – and over half of that number (55%) occupy senior positions including managerial and directorial roles.

It’s this performance that has made the area a magnet for young professionals that want to work in ‘one of the most promising technological sectors in Europe’. This level of demand means that the region can capitalise through inward investment, creating new residential and commercial space to accommodate a rising population.

This has resulted in the most people leaving London in over a decade. While regional cities are incredibly popular, the London Commuter Belt is a stand-out performer. According to Countrywide, Slough is the top destination for London renters with 46% of homes being let to tenants that have moved from London.

The London Commuter Belt is attracting quality tenants that are looking for quality developments and premium employment opportunities. This is not only driving higher potential yields but it’s showing the impact that increased growth is having on each individual location’s tenant demand. 

A little further out, Bracknell is set to experience one of the fastest-growing population rises in the UK with a 15% increase forecasted by 2036, closely followed by destinations such as Reading which is forecasting around 8%. As these locations grow, the local infrastructure will also be improved, creating new transport links and network connectivity.

Inward Investment

Investment levels in the UK have also increased over the years. With UK investment 1.5 times higher than Germany and 2.6 times higher than France at the start of 2019, an incredible amount of money is being invested into businesses throughout the UK – especially those in the South East and along the M4 corridor.

According to Gerard Grech, the CEO of Tech Nation, the UK continues to overperform in the technology sector: “The UK continues to exceed all predictions when it comes to tech growth… the UK is a critical hub when it comes to global technology developments, with scale-up tech investment being the highest in Europe.”

Over the last 20 years, Reading property has grown by 206% while Bracknell has increased by 221%. These two towns are cornerstones of the UK’s Silicon Valley and classic examples of how a booming tech sector has influenced the property sector. With high-quality developments, improved infrastructure and increased demand, the towns and cities within the area are forecasting unprecedented growth heading into 2020 and beyond – with the South East set to be the fastest-growing region in the country at 14.2% over the next five years.

Unlocking the Potential of the UK’s Silicon Valley

Investment levels in the UK continue to increase. With UK investment 1.5 times higher than Germany and 2.6 times higher than France at the start of 2019, an incredible amount of money is being invested into businesses throughout the UK – especially those in the South East near London. 

According to Gerard Grech, the CEO of Tech Nation, the UK continues to overperform in the technology sector: “The UK continues to exceed all predictions when it comes to tech growth… the UK is a critical hub when it comes to global technology developments, with scale-up tech investment being the highest in Europe.”

Looking ahead, the UK’s Silicon Valley has a huge amount of untapped potential. Around 1.7 million positions were advertised across the UK’s 12 biggest tech hubs in 2018, demonstrating huge potential for global brands that want to take advantage. 

Gerard Grech believes that as sectors merge, the need for tech-based skills is at a ‘generational high-point’ which highlights the need for these skills to evolve and grow over time. The quicker that countries, regions and businesses can adapt to new ‘network-based economies’, the more prepared they will be to take advantage. 

Over the last 20 years, Reading property has grown by 206% while Bracknell has increased by 221%. These two towns are cornerstones of the ‘traditional’ commuter belt near London and classic examples of how a booming tech sector has influenced the property sector. With high-quality developments, improved infrastructure and increased demand, the towns and cities within the South East are set to be the fastest-growing region in the country at 14.2% over the next five years.

For both global businesses and investors, these are all key signposts of success. As the region continues to build on the tech foundations that delivered success, and the growth of the tech sector accelerates, there’s no doubt that more global businesses will look to the UK as their new home.

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