Secondary cities getting edge over metropoles

MUNICH - Property investors are increasingly sidelining Europe's metropoles in favour of smaller cities. During a forum at the annual Expo Real fair in Munich on Wednesday, a panel of property experts unanimously claimed the trend in investment was moving towards so-called 'secondary' cities.

'In many ways, places like London and Paris have become victims of their own success,' said Max Beekmann, Research Manager for Pramerica Real Estate Investors in Munich. 'Costs have increased so dramatically that people can no longer afford to live there and rather than spending half their lives commuting, decide to move to an alternative, smaller city.' With this population growth, according to Beekmann, come a self-sustaining economy, job opportunities and thus great potential for investors.

'Somewhere like Dublin, for example, is a lot more interesting than somewhere three times its size,' said Alessandro Bronda, Head of European Research for Aberdeen Property Investors in Brussels. 'It's about opportunity rather than history, and it's not going to be long before secondary cities are catching up with the capitals. The markets are already maturing.'

Claus Thomas, Managing Director of LaSalle Investment Management GmbH in Munich, said for certain sectors, secondary cities could prove a much better investment than primary locations. 'Take retail for example,' he said. ' Size is not everything. A secondary city with a good catchment area and a lot of purchasing power will probably do better than a primary city where there is a huge amount of competition. Secondary cities often have a less volatile office market, so rents are more stable than in the capitals.' Among those locations tipped by panellists to be prime markets of the future were Thessaloniki in Greece, Gothenburg in Sweden and Hamburg in Germany.