news | 12 February 2013 | PwC Cyprus

German cities top commercial real estate investment prospects αs investors continue to seek safe hav

New Emerging Trends in Real Estate® Europe 2013 Report released by Urban Land Institute and PricewaterhouseCoopers

German cities dominate the investment prospects for Europe’s commercial real estate sector as investors continue to favour safe haven locations according to Emerging Trends in Real Estate® Europe 2013, a real estate forecast published jointly by the Urban Land Institute (ULI) and PwC. The ranking of 27 cities across Europe, based on respondents’ expectations for market performance in 2013, sees Munich top the league table followed closely by Berlin in second place and Hamburg in fifth position, with investors taking comfort from each of the cities’ strong local micro-economic climate and resilient property market conditions.

London, which is seen by many as Europe’s ultimate safe haven market, is the largest riser in this year’s report taking third position. 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.

Overall, the cities that are ranked highest are the larger Western European centres with international appeal and better economic prospects. In contrast, the worst performing cities were those in countries at the heart of the eurozone crisis or struggling to cope with the consequences of the 2008 financial meltdown such as Athens, Lisbon, Dublin, Madrid and Barcelona.

Approximately 80 percent of the respondents surveyed for the report believe that the eurozone crisis has presented their own business with new opportunities. However this relative optimism is tempered by a general consensus that there will be little improvement in the overall European economy or the region’s real estate market during 2013. Survey participants were more pessimistic about the outlook for cities’ property markets than they have been since 2004 and 45 percent of the respondents expect capital values to remain stagnant until 2017.

The report notes that the tempered optimism is a result of real estate companies restructuring their business over the past five years and now beginning to deploy new strategies to profit in challenging economic and property market conditions. The top five European real estate investment markets in 2013 are predicted to be Munich, Berlin, London, Istanbul and Hamburg.

One of the areas causing the industry the most concern is the availability of debt and the estimated £350bn -£600bn lending gap caused by the banks continuing to undertake a structural reduction in commercial real estate lending. The report shows that up to 43 percent of businesses found it harder to secure debt during 2012, with 56 percent of the industry expecting there to be less debt available for refinancing and new investment in 2013.

This pessimism is particularly felt in Portugal, Greece and the Benelux countries although a reduction in debt availability is also expected in Spain, Italy and Turkey. In contrast, over 60 percent of businesses in the UK expect an unchanged or improved borrowing environment, even though individual banks remain reluctant to act as sole lenders on deals of more than £50 million.

The report outlines the following “best bets” for 2013:

Concentrate on value-added locations in key cities - Core properties might be hard to find but there are pockets in key cities that appeal to dominant occupiers such as telecommunications, media and technology (TMT) firms and creative enterprises.

Hunt for institutional-quality properties in suspended animation - Banks are more willing to release good assets in need of capital expenditure and clever asset management, before values decline further.

Look for deals in Ireland and Spain - Develop relationships in the right places. Ireland may be most accessible through lenders outside of NAMA, while in Spain, now is the time to start conversations with key players such as SAREB.

Opportunities from buyers of distress - Buy loans and properties out of larger portfolios acquired by opportunity funds and use management expertise to increase income and value.

Follow the money - Europe is a key destination for  tourists from China and other emerging markets and tailoring retail, hotels and leisure investments for this spend can bring rewards.

Team up with a local player in a local market - Find a company in a secondary city that can provide intelligence about where bargains can be found, which assets for sale should be investigated or avoided and what properties are about to come to market.

Refurbish buildings to green standards - Seek out good buildings with slight “blemishes” and turn them into strong performing green assets.

To download a copy of Emerging Trends in Real Estate® Europe 2013 and to view a short video of industry leaders discussing the implications of the report please visit


Top 10 European Cities for Existing Property Investments

  2013 Ranking 2012 Ranking Change
1 Munich 2 ↑1
2 Berlin 4 ↑2
3 London 10 ↑7
4 Istanbul 1 ↓3
5 Hamburg 7 ↑2
6 Paris 6 ↔0
7 Zurich 8 ↑1
8 Stockholm 5 ↓3
9 Moscow 9 ↔0
10 Warsaw 3 ↓7

Emerging Trends in Real Estate® Europe

Emerging Trends in Real Estate® Europe is a joint report published annually since 2003 by the Urban Land Institute (ULI) and Pricewaterhouse Cooper (PwC). The report provides an outlook on European real estate investment and development trends, real estate finance and capital markets, as well as trends by property sector and geographical area. It is based on the opinions of more than 500 internationally renowned real estate professionals, including investors, developers, lenders, agents and consultants.

Analysis from Dirk Brouen, professor of real estate economics at Tilburg University, which compares actual IPD property market performance data with past Emerging Trends predictions, demonstrates that the report has correctly predicted what the overall trend for European real estate would be in eight out of the past 10 years.

About the Urban Land Institute

The Urban Land Institute ( is a global nonprofit education and research institute supported by its members. Its mission is to provide leadership in the responsible use of land and in creating and sustaining thriving communities worldwide.  Established in 1936, the Institute has nearly 30,000 members representing all aspects of land use and development disciplines.

About PwC 

PwC helps organizations and individuals create the value they’re looking for. We’re a network of firms in 158 countries with more than 180,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see for further details.

Media Contacts


Caroline Underwood

Deputy Head of Media Relations

Direct Tel: +44 (0) 20 7212 3097


Urban Land Institute

Peter Walker

Director of Communications

Direct Tel: +44 (0) 20 7487 9586


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