EUROPE - Toulouse, Munich and Hamburg have been ranked first, second and third as the most attractive city residential markets in Europe by Patrizia Immobilien.

Markus Cieleback, head of research at Patrizia, told IP Real Estate: "In absolute terms, so-called core cities have enormous growth rates but these smaller cities have much higher growth in relative terms."

The study by the German investment company was based mainly on demographic and economic data from 82 European cities.

Toulouse, Munich, Hamburg and Stockholm (ranked fourth) were top of Patrizia's list by a significant margin, followed thereafter by Paris, Bordeaux, Utrecht, Zurich, Vienna and Geneva.

Cieleback cited a record demographic growth rate of 10% for Munich, which compares favourably with growth rates of between 6% and 8% for major cities like London and Paris.

"Of course these large cities offer much more liquidity for investors but they are also expensive," he said.

Commenting on the success of Munich and Hamburg in the ranking, Cieleback said the two cities were exceptional both in terms of their demographic development and economic set-up as they relied on a number of sectors for growth. "These cities can help reduce risk in a portfolio by adding diversification," he added.

Cieleback identified the best risk-return profile from residential property as arising in Germany, France, Scandinavia and the Netherlands.

The bottom 10 markets in Patrizia's study, which took into consideration the legal framework for each market, comprised Ostrava, Sevilla, Breslau, Porto, Brno, Pilsen, Valencia, Riga, Birmingham and Budapest.

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