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London rated top European city for investors

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London is again this year the favorite European city among commercial property occupiers and investors, according to the ninth European Regional Economic Growth Index published on Tuesday.

London won because of its strong employment growth in the financial sector, the annual report said, adding that London’s “much maligned infrastructure” is already benefiting from the preparation work for the 2012 Olympics. The comprehensive survey of the European region was conducted by LaSalle Investment Management, a global real estate fund manager, which analyzed the relative sizes, growth levels and business activity of 91 European cities and identified those expected to be in greatest demand among occupiers and investors over the medium term.

London remained on top for two consecutive years. “London in particular has benefited from its levels of growth this year, which have been helped by a lighter touch regulatory regime than elsewhere,” the report said. Three British cities are among those with the most uplifted ranking: Birmingham, ranking 29th, Nottingham-Derby, 30th and Cardiff, 47th. The strong performance of these cities owed to the prosperous UK economy in 2006 and optimistic prospects for 2007 and 2008, characterized by increased employment growth expectations, the report said.

Paris, which ranked second last year and first the year before, has been overtaken by Munich because of forecasts of reduced employment growth.
Munich is benefiting from German’s rapidly developing economy and its position as the country’s most attractive city, the report said.

The report also said European real estate is set to shrug off the worst effects of the credit crisis. However, the report warned that the credit crisis, rising interest rates and diminishing rental yields, may lead banks to become more cautious, putting pressure on highly leveraged investors. (people.com.cn)

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