Revealed: The top investment hotspots in Europe

Berlin is the number one investment hotspot in Europe for 2016, according to the latest annual report by the Urban Land Institute (ULI) and PwC.

The study, titled “Emerging Trends in Real Estate Europe 2016: Beyond the Capital”, highlights Germany as a major country for investors in the coming year, with Hamburg and Munich also ranking well.

Changing demands from occupiers, technology and rapid urbanisation are all factors in the shifting outlook for European real estate, which PwC says have caused investors to focus on cities rather than countries. Indeed, while the continent’s overall economic picture has not always been positive, Spain’s capital city, Madrid, was ranked one of the top hotspots for investment by PwC last year. As of the four quarters ending Q3 2015, it was Europe’s fifth most active real estate market, turning over €5 billion. For 2016, Madrid is ranked fourth, below Dublin and Hamburg, which knocked the Irish city into third place.

With more than €5 billion in investments over the year to Q3 2015, over half of which originated from foreign buyers, Hamburg is the sixth most active market in Europe. While Dublin is also attracting plenty of capital, the consensus is that the Irish capital has already reached its peak for opportunistic returns. Indeed, Belfast is now set to be promoted to international investors at the MIPIM international property showcase in France this March. Belfast City Council has put £60,000 towards the delegates attending the event, hoping to catch the attention of the 4,500 investors from around the world that will be there.

Many interviewees in PcW’s survey expect Berlin to “thrive well beyond 2016”, based on its young population and its growing reputation as a technology and cultural centre, as well as the land available for development.

Ray Withers, CEO of specialist property investment company Property Frontiers, which is offering high specification buy-to-let apartments in the city at Stadtpark Steglitz, comments: “We’re seeing some rapid shifts in Berlin’s property market after almost two decades of very little activity. It’s an exciting time to be part of the market there and property investors around the world are looking to Berlin as one of Europe’s top residential real estate investment destinations.”

London, on the other hand, has fallen out of the top 10, suggesting that investors are seeing better growth prospects in regional UK and European cities in the short term. Indeed, Birmingham has held on to its sixth place spot from last year, with the city set to benefit from substantial infrastructure investment, such as the HS2 high-speed rail line to London scheduled to open in 2026.

“In the long term, however, the UK capital remains the first choice in Europe for many international investors focused on wealth preservation with liquidity and the scale of the market, together with relatively robust economic performance,” comments the report.

PwC also highlights growing investor interest in sectors such as healthcare, hotels and student accommodation in an attempt to combat wider uncertainty.

41 percent of survey respondents would now consider investing in these sectors, compared to just 28 percent a year ago.

“Investors are getting more creative in trying to access future prime assets at reasonable prices through more focus on alternatives and development,” says ULI Europe CEO Lisette van Doorn. “They take more risk on the short term to fulfil their long term objective for core assets.”