Berlin knocks Munich off top spot in Emerging Trends ranking

Berlin has ousted Munich from the top spot for investment prospects in Europe this year, according to Emerging Trends in Real Estate Europe 2015, a forecast published jointly by the Urban Land Institute (ULI) and PwC.

Dublin ranks again second place, followed by Madrid which has shot up the rankings for investment prospects this year with many international investors set to target the city. Hamburg has slipped by one place this year, but this is mainly due to investors looking to smaller, less established markets rather than any real decline in the city’s fundamentals. Athens is the biggest mover on the list, climbing 23 places to number 5.

Like Madrid, Berlin is seeing a wave of international investors pour capital into the city. Historically dominated by domestic buyers, the city is a hotspot for media and technology and its young population has helped boost the investment appeal of its residential sector, the report said.

Dublin continues to have a good story to tell: strong rental growth based on low supply, employment growth and an improving economy. Office rents and values are recovering strongly but still have some way to go before they reach their pre-crisis peak.

While Madrid has shot up the rankings for investment prospects this year due to growing interest from international investors, the report questions whether the Spanish city offers solid, long-term business prospects. Back in Germany, international investors are also flooding into Hamburg, and accounted for half of the €2.4 bn of deals in the first three quarters of 2014. Its growing population means the residential sector is thriving, the report said.

Until recently, investors interested in entering distressed markets have focussed primarily on Spain, Ireland and Italy, but Greece is starting to gain attention. Although Europe’s hardest-hit economy remains fragile, a few trailblazing investors are moving in to take advantage of pre-rebound opportunities.