Demand for Tech Talent Fuelling Growth in European Markets, According to New CBRE Analysis

• Development of new technologies is creating demand for tech talent in emerging markets, leading to increased capital funding, particularly targeted around specialist university programmes

• Markets including Bucharest, Porto, Seville, Tallinn, Valencia and Wroclaw set to emerge as tech clusters

Deployment of new technologies such as artificial intelligence is driving the search for skilled tech talent across Europe, according to CBRE’s inaugural Global Tech Talent Guidebook.

CBRE’s Global Tech Talent Guidebook analyses key labour trends across 75 global markets, 25 of which are in Europe, and the impact of those trends on tech industry growth and real estate costs. All of the European markets in the report recorded tech industry employment growth between 2017 and 2022.        

Demand for tech talent is beginning to outstrip supply in some markets, spurring employers to expand their hiring to relatively untapped locations, further driven by high labour costs and the greater acceptance of remote workforces in many well-known global markets.

As a result, this has opened opportunities for a number of emerging markets. CBRE identified Bucharest, Porto, Seville, Tallinn, Valencia and Wroclaw as being among the growing number of emerging markets across Europe, based on a range of factors including tech talent growth, educational attainment, governance and existing tech ecosystems.

Mike Gedye, CBRE’s Head of Tech, Media & Telecoms for Europe said: “The surge in tech talent demand in a number of countries across Europe is outpacing supply, leading more tech companies to seek out lesser-known markets where they can be an employer of choice.”

“Rising demand for tech skills in various industries is further fuelling a shortage of skilled professionals, with the fastest growing fields such as artificial intelligence, deep tech and even quantum computing set to see the strongest competition. The future of tech talent will be centred around quality as much as quantity, and the search for these specialisms will be increasingly distributed across tech clusters that can sustainably deliver this specialist expertise.”

Costs That Impact Market Expansion

Companies compete for skilled tech talent by offering attractive compensation packages. Software engineers in Amsterdam received the highest total compensation globally in 2023 at $204,673, which included base pay and additional benefits. Three more European cities, London, Berlin and Frankfurt completed the top five for total compensation alongside San Francisco Bay Area, with salaries totalling over $170,000 in all four markets. Lower levels of remuneration are offered in parts of southern and eastern Europe, such as Budapest, Warsaw and Rome.

When evaluating the cost to expand into a new market, companies also consider office and apartment rents. According to the report, Paris had the highest average annual asking rents for office space in Europe at over $98 per sq. ft. in Q3 2023. Office rents were lower in cities in southern and eastern Europe, aligned with lower compensation packages. For apartments, Dublin, London, Amsterdam and Paris had the highest average rents in the region at over $1,800 per month. However, Berlin and Lyon offered the lowest rents - both under $1,000.

CBRE’s Head of Office Occupier Research for Europe, Richard Holberton, said that the cost barriers in the most expensive cities provide an opportunity for these emerging, lesser-known markets to compete. “Well known, leading markets such as London and Paris will continue to be seen as tech powerhouses based on their scale and long-term fundamentals. However, it’s really interesting to see so many new markets coming to the fore, all of which hold strong growth potential and offer diverse benefits in terms of skills and infrastructure for agile companies.” 

Venture Capital Funding Varies

Meanwhile, investment in tech companies accounts for more than half of global venture capital (VC) funding since 2012, making the tech sector the top industry to receive VC funding for over a decade. CBRE’s analysis of CB Insights data found that global VC funding across all sectors totaled almost $235 billion in 2023, 21% of which was placed in Europe, the Middle East and Africa (EMEA). By deal count, EMEA claimed 28% of total VC activity due to the regions high volume of startups.

Advancements in artificial intelligence (AI) have attracted historic levels of VC funding, leading to increased demand for skilled talent. In 2023, VC funding in AI companies globally was $26.5 billion across more than 1,900 deals, 27% of which were in EMEA.

Read the full report