In February, Savills released the third edition of its Tech Cities index, which measures 30 global cities against 100 individual metrics to establish where the optimal homes are for tech and start-up companies around the world. Absent from this and previous years’ indices was Prague, which failed to muster enough venture capital to qualify for the ranking. However, on several other key measures (using not always the same but broadly similar metrics) the Czech capital actually performs rather well.

VC investment volumes across the 30 Tech Cities rose from $37.0 billion in 2012 to $207.8 billion in 2018, giving an average of $5.8 billion. Chinese Tech Cities have risen fast, and now account for a higher share of VC investment than their US counterparts; Beijing recorded an average $34 billion of VC investment per annum over the last three years – volumes higher than even those of New York and San Francisco, the cities occupying the top two places in this year’s ranking. Set against this, Prague’s average annual VC investment over the three-year period (for headquartered companies only) was a paltry $12.7 million.

However, there is a lot more that goes into making a successful Savills Tech City than just VC investment.

The assessment for each city comprises over 100 individual metrics, ranging from the number of days needed to start a business through to the cost of a flat white coffee. These metrics are grouped into the following six categories, which are then weighted to reflect its importance to the tech sector:

• Business Environment
• Tech Environment
• City Buzz & Wellness
• Talent Pool
• Real Estate Costs
• Mobility

Metrics other than VC in the Tech Environment category come out better for Prague. The city’s number of startups per 1,000 inhabitants is on the low scale at 0.9 per 1,000 people, compared with an average of 2.2 across the 30 cities and the highest ratio of 22.7 for San Francisco. But Prague’s figure is on a par with Barcelona, Berlin, Dublin and Stockholm, and significantly higher than other tech cities such as Buenos Aires, Cape Town, Hong Kong, Melbourne and Seoul.

Doing business

In other categories Prague would appear to perform even better. In the Business Environment category, Prague would be well placed in the ease of starting a business metric if that were solely based on the World Bank’s Doing Business survey. The Czech Republic ranks in 35^th place on the latest World Bank ranking, which would put Prague in the top half of the table, above the cities of the Netherlands (Amsterdam), China (Shanghai, Beijing, Shenzhen Hangzhou, Chengdu), Israel (Tel Aviv) and India (Bengaluru), amongst others.

Other metrics within the Business Environment category include passengers across city airports and annual passenger growth at those airports. Prague’s figures are 16.8 million and 17.9 per cent, respectively, which would put it bottom of the list for absolute numbers (Prague is a relatively small city), but its rate of growth is almost three times the average of 6.9 per cent for the 30 cities.

Tech City Life

In the City Buzz & Wellness category – which is based on various metrics such as cost of living, cost of eating out, nightlife, spending on recreational and cultural activities, flat white index, health expenditure, life expectancy, quality of life index, quality of green spaces and parks, and crime – Prague would probably occupy a mid-table ranking, given it performs reasonably well in a similar survey put out by human resources consulting firm Mercer.

Mercer’s Quality of Living Ranking 2019 report places Prague in 69^th place out of 231 cities surveyed, making it the highest ranked city in Central and Eastern Europe and above the Savills Tech Cities of Hong Kong, Seoul, Buenos Aires, Santiago, Cape Town, Shanghai, Tel Aviv, Beijing, Shenzhen, Chengdu and Bengaluru.

Where Prague would score particularly well in the City Buzz & Wellness category metrics are those associated with crime (the Czech Republic enjoys one of the lowest crime rates in the EU), the quality of green spaces and parks (Prague has 20 per cent green spaces and 12 large natural parks) and the relatively low cost of living in the city (the EU calculates the price level for consumer goods and services in the Czech Republic at 68 per cent of the EU average, though Prague is obviously more expensive than elsewhere in the country judging from the price of a flat white at about $3.30 – Tel Aviv prices!).

In the Real Estate Costs category – comprising the cost of renting commercial and residential property, and the cost of coworking space – Prague performs well, being more in line with the relatively cheap costs of emerging market cities in places like China, than those in Western Europe and the US.

According to Numbeo, a crowd-sourced global database of statistics, the average rent of a one-bedroom apartment in the centre of Prague is around $200 per week, compared with the average mainstream residential rent covering the 30 Savills Tech Cities of $350. The highest rent in the Savills survey was found in San Francisco at $720 per week, while London, LA and Hong Kong were in a cluster of $490.

Apartment rents, of course, must be seen in the context of salaries, since housing is normally the biggest item in monthly household expenses – and here Prague is at a distinct disadvantage. Savills research shows that apartment rental prices in the Czech capital are now in line with other major cities in Europe such as Berlin. Yet the average Prague salary is less than half that of its Berlin neighbour.

Coworking space rental costs tell a similar story, with Savills Czech Republic data showing the cost of a desk in a private office in Prague is relatively low at $350-420 per month, in line with that in emerging market cities like Bengaluru and Cape Town, compared with the $590 average among the 30 Tech Cities and far below that of San Francisco at $1,050.

Getting around

The category of Mobility – ie. the ease that a city’s population can get from point A to point B – is an important consideration for the success of a tech city, especially since those on the Savills list are home to 291 million people and are forecast to add another 18 million over the next decade, which will put greater pressure on existing infrastructure.

Savills considers three elements when assessing the Mobility category: the availability, density and investment in shared mobility services (car, bike and scooter sharing services), the scale and level of innovation in the city’s metro system, and the quality of urban infrastructure (walkability, cycle networks, congestion and air pollution).

London ranked first overall for Mobility in the Savills survey, helped in part by the city’s public transport system offering smart ticketing (mobile, contactless, Oyster) that is integrated across all transport modes (from rail to bus). Prague too has a well-integrated transport system (bus, tram and metro) with smart ticketing, meaning it would score highly on this measure. Also helping its score is good availability of shared mobility services (car, bike and scooter sharing services), as well as an urban form that is conducive to cycling and walking, making sustainable modes of transport popular. Recent worries about collapsing bridges in the Czech capital notwithstanding, the quality of urban transport infrastructure (walkability, cycle networks, bike lanes etc) is also improving.

Pollution is where Prague falls down in this category. Its 17 annual mean PM2.5 ug/m3 level is much lower than that found in the large emerging market cities like those in China and South America, but it is high compared with its Western European counterparts like Berlin, Copenhagen, London and Stockholm, especially when you consider the city’s smaller size.

The category where Prague would probably do worst would be Talent Pool. The metric of millennial-to-boomer ratio (millennials: 20 to 39 year olds, baby boomers: 55 to 74 year olds) is poor for Prague at 1.27 (there are 368,981 millennials vs 291,510 boomers, according to the Czech Statistical Office). This compares with an average of 1.92 across the 30 Savills Tech Cities. And Prague’s population growth forecast by the UN of 5.8 per cent over the next 10 years is also significantly lower than the average forecast of 8.7 per cent growth for the 30 Savills Tech Cities.

FURTHER INFORMATION

Read more: Tech Cities in Motion Report