Outlook 2013: German cities outperform as safe havens

Investors will continue to head for German safe-haven cities in 2013, according to the ULI/PwC Emerging Trends report. Munich, Berlin and Hamburg all feature in the top 5 cities for existing property investments as investors search for dependable locations that can withstand economic turbulence.

The report ranks Munich top of the league table followed closely by Berlin in second place and Hamburg in fifth position. Munich has the lowest unemployment rate in Germany and a growing job market as the biotechnology, environmental sciences, media, and genetic engineering sectors expand. Its population is also rising, with close to 1
million forecast to live in Bavaria’s state capital by 2025. Dubbed ‘Silicon Allee’, Berlin has gained a reputation as a magnet for tech businesses as well as being a creative hub. The city’s technology, media and creative industries total almost 37,000 companies, while the clean technologies sector employs more there than anywhere else in Germany. The real estate market is responding to this growth, especially in residential - the most popular sector with survey respondents. London is ranked 3rd for new investment prospects (up from tenth last year) even though 54% of respondents claim the city’s market is overheated and overpriced and only 28% think it is fairly priced as a safe haven. ‘Investors continue to be attracted by the size and liquidity of its real estate market, the stability of sterling as a currency and its ability to stand alone from the rest of the UK and Europe’s economic issues,’ the report says. Warsaw took the biggest tumble down the rankings, dropping seven places to tenth position in the top 10 city league. Despite this fall, interviewees are confident about the Polish economy, which is the fastestgrowing in the European Union. Istanbul and Stockholm each fell three places to fourth and eighth position respectively. Prague’s fortunes have slipped this year, moving the city three places lower to 17th. The Czech economy is in recession, with government austerity measures hitting domestic consumption. Amsterdam fell from 19 to 22, reflecting a number of recent deals which highlight the fact that the value of Dutch real estate has fallen as much as that of Ireland and southern Europe. Dublin, meanwhile, is benefiting from a sentiment rebound, moving up from 26th place to 20. This reflects Ireland’s improving economy and the expectation that the flow of distressed assets will increase in 2013. Overall, survey respondents view Europe as a series of separate markets with microopportunities rather than a problem-prone region. ‘Rather than worry about breakup, a scenario we can do little about, we’ve taken the view that there are demographics and long-term trends that are appealing,’ says one respondent.

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