TOP Europe for real estate investment

Experts of the annual study "Prospects and Trends in the European Real Estate Market 2015" claim that it is most profitable to invest in real estate in Berlin, Dublin, Madrid, Hamburg and Athens. And it is better not to look at real estate in Paris, Zurich, Vienna, Rome and, predictably, in Moscow.

The European real estate market is gradually regaining its attractiveness, despite concerns related to the weak economic positions of some cities, reports luxury real estate expert Yana PROPERTY.

Based on the analytics provided by Yana PROPERTY specialists, let's talk specifically about some of the European countries:

1. Castling in Germany.

In 2015, Berlin (1st place) displaced Munich from the top spot of the European Property Investment Outlook ranking. Previously, Berlin property was invested mainly by local investors, but in the first three quarters of 2014 alone, the situation changed radically – international investors concluded deals worth 2.9 billion euros.

Munich (11th place) fell 10 places from first place in 2014. Many experts believe that such a sharp decline is explained by both significant competition from Berlin and the unjustifiably high cost of rent in recent years.

The third most promising city for investment in Germany is Hamburg (4th place). In one of the young districts of this city – Hafen City, the most promising project in Europe is planned. It is expected that Hafen City will double the city's population, which will contribute to the development of the residential real estate market.

2. Stability in Ireland

For the second year in a row, Dublin (2nd place) occupies the second place in the ranking. Such a high position of the capital of Ireland is explained by the highest rate of economic growth among the countries of the European Union. In the second quarter of 2014, the Irish GDP increased by 6.5%. The cost of square meters is growing with astonishing speed – in the first three quarters of 2014, transactions worth 2.2 billion euros were concluded.

3. South of Europe

• Spain is a real hotspot for investors.

In one year, Madrid (3rd place) moved up a whopping 16 places to become the bronze prize winner in the battle for the largest investments. Global capital has flowed generously to Spain, directed by private investment funds.

Barcelona (13th place) is also basking in the rays of the capital's investment glory. It is a wonderful tourist city, which has risen nine places in 2014 and occupies 13th place in the financial attractiveness rating. Despite such excitement, real estate prices in Madrid and Barcelona are still 30% below pre-crisis levels.

• Greece is still in a state of stagnation, but its economy has begun to show signs of recovery, albeit barely noticeable, but enough for international capital to turn its “greedy” gaze on it.

The biggest surprise of this study was Athens (5th place), which jumped 18 positions.

• Portugal – its economy is showing stable growth, this is explained by powerful injections into the country's economy – 78 billion euros from the European Union and the International Monetary Fund.

The investment climate in the Portuguese capital is good. Lisbon (9th place) rose by as many as 17 positions.

• Italy is another "warm" place in the south of Europe.

Despite the weak economy and unstable political situation, investors are showing interest in Milan (12th place) – the city has moved up 12 positions. They are primarily interested in office space and retail space. Interestingly, prices in the residential segment are much higher here than in other sectors.

The high ranking of this Italian city does not affect the position of Rome (27th place). As in Milan, the most attractive segment of the real estate market here is office. The main problem of Italy is that investors do not trust the government of this country enough to invest their capital here, experts note.

4. City number one

London (10th place) ended up at the bottom of the top ten this year. And although for many it remains the number one city, where people from all over the world continue to flock, and prices for residential property are breaking records, investors have cooled somewhat towards the capital of Foggy Albion.

Birmingham (6th place) rose 14 places at once. Experts note that the value of regional centers of Great Britain, such as Manchester and Bristol, will also increase soon.

Scotland's capital Edinburgh (19th place) has dropped two places. Experts also note that the political situation in Scotland is stable at the beginning of 2015, but nevertheless the question "What next?" hangs in the air. Many believe that only a very brave person would risk investing in Scotland now.

5. Northern Europe

• Denmark – The economy of this country is still fragile, but it is showing steady growth. The forecast for GDP growth in 2015 is 1.7%.

The capital of Denmark, Copenhagen (7th place), has been in the top ten for the second year and even moved up one position.

• The Netherlands – the state has adopted a set of measures aimed at developing social housing, and this will only contribute to an increase in investment in residential real estate.

Amsterdam (8th place) has climbed a large number of positions – as many as 17. Such a leap in the capital of the Netherlands is explained by the high level of vacancies – almost 16% in the office sector, which will certainly increase the city’s population.

• Sweden – GDP growth is expected to be 3.3%, the highest among eurozone countries.

Stockholm (15th place) lost 6 places and fell out of the top ten, but despite such a significant decline, the Swedish capital, like other major cities in Northern Europe, remains on the radar of international investors.

• Finland – The country's economy, showing signs of recovery, is attracting foreign investors.

Helsinki (17th place) slipped two places in the ranking. In the first half of 2014, contracts worth €1.25 billion were signed, significantly exceeding the €800 million in the same period in 2013.

6. Neighboring countries of Ukraine

• Poland is the leading country in the Eastern European region, with contracts worth €2.5 billion signed in the first three quarters of 2014.

Warsaw (14th) has dropped three places this year, but the Polish capital still holds a strong position in the investment rankings thanks to the country's significant economic recovery, political stability and population growth.

• Czech Republic – investors in this country are attracted by all segments of the real estate market. In the first half of 2014, contracts worth 680 million euros were signed – the highest amount in the last three years, which is 18% of the volume of investment in real estate in Eastern Europe.

Prague (18th place) fell two places, despite the fact that the Czech government forecasts stable GDP growth of 2.7% this year (compared to 2.5% in 2014).

• Turkey – Turkey's economy has faced adjustments this year that will affect the office and residential real estate market

Istanbul (20th place) dropped 13 places. The decline in the city's investment attractiveness is not surprising – the blame lies with its proximity to Syria and Iraq, which continue to have a significant impact on Turkey's economy.

• Hungary remains one of the least popular destinations among investors.

Budapest (22) moved up five places in 2015 as investors finally turned their attention to Central and Eastern Europe. Strong GDP growth (forecast 2.5% in 2015) is fueling their interest.

7. Losers of the year

• Belgium – Economic activity in Belgium is very weak, with projected GDP growth barely reaching 1.5%.

Brussels (21st place), which rose two positions, can be considered a loser in the rating, if only because the capital of Belgium opens the third ten. Experts unanimously note the shortage of class A premises in Brussels (luxury offices in modern skyscrapers).

• France – A deteriorating economy and political instability are scaring off many investors. French GDP growth forecast for 2015 is 0.7%.

Paris (24th place) fell 10 places in the ranking. Experts note that real estate prices here are too high, and investing in La Defense (the main business district of Paris) is like catching a sharp knife on the fly.

Lyon (23rd place) is also the second leader in real estate investment after Paris and is ahead of the capital by only one place in the ranking. In the first three quarters of 2014, Lyon received 50%, or 750 million euros, of investment in real estate in France.

• Switzerland is a country that has a reputation as a financial paradise with a fast-growing economy.

One of the biggest losers is Zurich (25th place), down 19 places. However, it has a very small property market and there are concerns that the office sector in Zurich, as in other Swiss cities, is significantly overvalued.

• Austria – experts do not predict that the capital of Austria will regain its lost positions in the next 18 months.

The uncertain economic situation and low demand for rental properties have dropped Vienna (26th place) 14 places. Certain investment expectations are associated with the construction of the FloridoTower skyscraper with a total area of 5 thousand square meters.

• Russia — An uncertain political and economic climate has brought the country’s real estate market to a standstill. Accordingly, commercial real estate transactions in the first three decades of 2014 fell to €2.7 billion, compared to €4 billion in the previous year and €5.67 billion in 2012. The International Monetary Fund forecasts Russian GDP growth of only 0.5% in 2015.

It is not surprising that Moscow’s rating has fallen (27th place) – it has dropped by as many as 15 positions and is in last place in the table.