German cities to dominate Europe’s commercial real estate sector

Since the European economic crisis, foreign investors have been predominantly investing in London, and London alone. Investment has been concentrated in offices in Central London, this market being considered the safest option. But recent research dispels this theory, and is now showing that there are equally good investment opportunities across the European Union (EU).

A report compiled by the Urban Land Institute (ULI) and PricewaterhouseCoopers (PwC), ‘The Emerging Trends in Real Estate Europe 2013’, has designated 27 European cities as perfect options for safe investment this year, based on their expected market performance. German cities trump others in terms of investment in 2013, with Berlin, Hamburg and Munich being placed in the top five European cities tipped for safe investment. Cities once considered safe, such as Dublin and Lisbon, are now the worst performing cities in the EU, although this is perhaps not such a surprise considering the recent turmoil surrounding both Ireland and Portugal. 

In this German-dominated league table, the city of Munich comes first, followed closely by Berlin, while Hamburg is located fifth in the survey. The report indicates that to invest in one of Germany’s cities may be a safe option, especially due to the cities’ robust local micro-economic situations as well as their strong market positions. London has climbed the ladder in its ranking, taking third position, a jump which is the highest of all the European cities, with offices in Central London still highly sought after. The overall result of the report expresses that the largest Western cities, with international appeal, provide investors with overall better economic outcomes, while the cities of countries that are suffering the most from the European economic crisis, such as the Spanish – Barcelona and Madrid, Greek – Athens, Portuguese – Lisbon, Irish – Dublin and Northern Irish – Belfast, have descended in the table. 

Eugene O’Sullivan, MRICS and director at Morgan Pryce, acknowledges the trend: “Since the start of the financial crisis, investors in real estate have remained cautious as to where to invest, hence the increase in ‘safe’ investments, and now they are sticking to top-grade cities in which they are guaranteed a return, rather than other high-risk cities – but which have potentially high returns as well.” 

Morgan Pryce is a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.