Over half of the cities surveyed in the annual Emerging Trends report on European real estate recorded a lower investment score than last year, including major markets such as London, Frankfurt, Copenhagen, Madrid and Rome. The top-ranked cities in the survey tend to be either in western or northern Europe, or growing regions to the east.
For the second consecutive year, Istanbul ranked first for both investment and development. Its popularity, the report said, is due largely to its strong economic growth prospects and favourable demographics. Retail development in Turkey has particularly high potential, with consumer spending on the rise and an influx of major international companies.
Munich came in second due to its appeal as a safe haven offering a deep and liquid market that is more stable than Frankfurt. With one of the lowest unemployment rates in Germany, Munich’s economy is also perceived to have fared well in the recent economic malaise.
Warsaw ranked third in the survey, due to the city’s rising prominence as the financial centre for the Eastern European region which is expected to boost the city’s office sector. Berlin came in fourth, thanks to its status as the most attractive market for residential investment. Its appeal, like that of Munich, is stability, and its popularity with interviewees reflects a wider search for safety in today’s market environment.
Stockholm, ranked fifth, was another favourite for investors picking safe cities. The city and Sweden overall have impressed investors with a strong performance throughout the financial downturn. It is considered one of the strongest markets in Europe, due to strong public sector finances and a solid export-driven economy.
The report also highlights the rise of Moscow as an investment magnet. Of the Russian-based interviewees, 82% anticipate deployment of more capital into real estate this year, and 75% expect profits to rise.
Concerns over the difficulty of obtaining assets, strong competition and pricing on the brink of a bubble pushed London down in the ratings for new investment, existing investment as well development