Cardiff beware! Gentrification’s coming!

CARDIFF: the capital of Wales; the largest city in Wales and the eleventh largest city in the United Kingdom. Nestled on the south coast of Wales, it was occupied by the Romans and then by the Normans, before being unified with England in 1536, along with the rest of Wales.

Cardiff has two things in common with East London.
•First, its docks have declined and an amount of public and private money has been pumped into the area to try to halt the resulting economic decline.
•Second, it has a large Somali population.
One of these factors (probably not the Somali one) has spiked the interest of Arbuthnot Latham, a “private and commercial bank” based in London which specialises in “wealth management and specialist commercial lending”. They have done some research and now conclude: Cardiff is the top city in the UK to start a business, with one new business being registered for every ten residents over the last two years.

The bank says that several factors have contributed to Cardiff’s success. Apparently the city shows “affordability” in the property market, which provides “an accessible entry point for entrepreneurs. We know all about “accessible entry points” in East London. It is a short way of saying that wages have not increased with fast-rising house prices, so the only people who can buyhouses in the area are rich professionals and professional landlords who will divide up the houses and rent them out as flats. Many of their tenants will be eligible for housing benefit – providing a public subsidy to these private landlords.

Chris Stevens, Senior Commercial Banking expert for Arbuthnot Latham, confirmed the position, describing Cardiff as a “potential target for property acquisition”. He went on to say, “The property costs in Cardiff are lower compared to Bristol and the Bath area, potentially leading to higher yields due to the lower entry costs. Several of my clients have expressed interest in House in Multiple Occupation (HMO) properties…” Housing seen as a commodity to be traded for private profit: yes, we have suffered this in East London too.

Another factor leading to new businesses being set up is, the bank says, that a large proportion of students stay in Cardiff after going to university there, so there is a steady supply of skilled professionals. Anglea Niering-Wren of Arbuthnot Latham confirms that “Cardiff University has a strong retention of graduates who choose to stay after experiencing the city, creating a high quality workforce.”

But the economic situation in Wales more generally is not great: perhaps the students have nothing to go back to. Perhaps there are no large employers in Cardiff, so the only way forward is to set up your own small business. And if the most academically able stratum of Welsh society is the “high quality workforce”, what are Cardiff’s native young people going to do? How are they going to find a job when they are competing against more qualified workers who are driving the local economy? Yes, East London’s been there too.

London, the report concludes, faces high costs, and although it has a “skilled workorce and strategic location”, it’s hard to run a successful business. Canary Wharf is aware, as it has seen a number of businesses leave or plan to leave the area as they realise that hybrid working can reduce their need for a central headquarters – saving significant sums of money.

Good luck to the new businesses in Cardiff – and to those in East London: but the rate at which they are being created tells us very little about their chances of success.

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