Investment potential shifts away from the South East as structural weaknesses around housing and infrastructure threaten UK’s most established centres, report says.

A new report from management consultants Arcadis looks at the different factors affecting a city’s inward investment and growth potential.

Titled Investing in Britain: Cities Built for the Future, the report ranks 24 cities on their performance across six key pillars and groups the cities into Established Economic Centres, Future Growth Hubs, and Smaller Regional Cities.

The pillars are: business environment; workforce and skills; infrastructure performance; housing; place; and city brand.

The report found Edinburgh was the most attractive city for inward investment. It topped the charts for economic performance and was recognised for having a strong quality of ‘place’ and high proportion of skilled and educated workers.

London came in seventh place, behind smaller regional cities including Liverpool (fourth) and Coventry (fifth).

Arcadis warns that Established Economic Centres like Edinburgh could fall down in the rankings if weaknesses around infrastructure and housing capacity – a direct result of population growth thanks to a city’s attractiveness – are not addressed.

This is one of the problems London, Manchester and Birmingham face, the report found.

While the these big cities have a lot of talent and resources, this cannot be sustained unless fundamental issues, such as housing, are addressed.

Future Growth Hubs, like the Northern Powerhouse and West Midlands, face different pressures on housing and infrastructure.

Compared to London, for example, these areas benefit from a more balanced housing market, healthy business environment with a sustainable pace of growth, and often a better quality of life.

According to the report, smaller regional cities need to consider different levers for attracting investment, building on their specific strengths and opportunities, including better access to schools and hospitals, cheaper housing and a better quality of life.

‘All cities have strengths and weaknesses, and no area is fundamentally “un-investable”,’ said Peter Hogg, UK Cities director at Arcadis.

‘The important thing is to recognise which levers need to be pulled — whether that’s more affordable housing, more efficient transport or better digital connectivity — to ensure a city attracts the type of investment it needs.

‘Every region needs to look at what it has, and how it can make the most of it.

‘Most importantly though, the governance of a city needs to be structured in a way that makes investment easier and more welcome.

‘From the agglomeration of industries and knowledge, facilitated by strong transport links, to identifying opportunities to create growth corridors, such as that proposed for Oxford and Cambridge, we need to see a more joined-up approach between regions.

‘This will ensure that investment opportunities are focused on the right locations, helping to accelerate growth potential and ultimately realise new sources of competitive advantage.’