Munich and Hamburg dominate ULI city rankings

Munich and Hamburg occupy leading positions in ULI's 2010 rankings of European cities offering the best investment and development prospects. The two German cities again top the league for existing property performance and are ranked second and third in the list for new property acquisitions. They also rank second and third in terms of development prospects.

The rankings, contained in ULI's Emerging Trends in Europe 2010 report, are based on surveys and interviews with well over 600 leading real estate investors, developers, financiers, and property managers. Many respondents see Germany as being more stable than other countries, both in terms of property markets and the broader economy. As one local interviewee puts it: 'German markets seem to be [amongst] the most stable ones for commercial properties; there has been little volatility.'

London and Paris, whose markets are likewise seen as stabilising, also score well in terms of existing property performance, holding third and fourth spot respectively. At the other end of the spectrum, the bottom three cities - Madrid, Barcelona and Dublin - are unchanged from the 2009 ranking.

In terms of prospects for new acquisitions, London takes the top slot, with Paris following in fourth place. Investors cite the dramatic falls in capital values and the weakness of the pound as factors making the London market attractive. However, there is widespread concern - particularly from UK-based respondents - that a bubble is developing and that capital markets are far ahead of fundamentals, the report states.

As in 2009, Istanbul occupies the top position for development prospects, followed by Munich and Hamburg with Warsaw in fourth place. The long-term economic prognosis for Turkey generally and Istanbul in particular is extremely positive, although the enthusiasm of local investors is generally greater than that of cross-border investors. As one international investor observes, Istanbul is a 'large city with a young population.'

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