Cities to watch: Europe

Manchester, UK

Metro population: 2,791,000
(+2.2% since 2020)

Greater Manchester has a population of around 2.8 million and is the single-largest economic area in the UK outside of London, with a diverse economy worth £75 billion ($91.83 billion; €86.97 billion), according to local firm Property Investments UK. Commercial property prices average 25 percent below the national average and 45 percent of those in greater London, and the city center is a popular buy-to-let and student housing area.

London, UK

Metro population: 9,648,000
(+3.7% since 2020)

Once again topping the annual PwC/ULI Emerging Trends list for European cities, with an overall 2023 prospect score of 2.62, London remains one of the most active, and most expensive, office markets in the region. London also saw the largest total of cross-border private capital investment from the US, topping $2.5 billion, according to global brokerage firm Knight Frank.

Paris, France

Metro population: 11,208,000
(+1.7% since 2020)

Paris passed London to become Europe’s top investment destination in the first quarter, according to American finance and rating company MSCI, thanks to three large sales in early 2023. Research by global brokerage firm JLL shows Paris saw $17.6 billion in total investment over the past four quarters and 4.4 percent rental growth in the second quarter with a healthy 8 percent overall vacancy rate.

Madrid, Spain

Metro population: 6,751,000
(+2.0% since 2020)

According to media reports, well-heeled investors across Latin America are investing heavily in Madrid, driving up property prices in the city and leading to an influx of new high-end retail and dining while increasing demand for luxury residential units. Research by global brokerage Knight Frank shows property pricing in Madrid remains lower than comparative global cities.

Athens, Greece

Metro population: 3,154,000
(+/-0% since 2020)

The Greek capital, one of the world’s oldest cities and host to classical era landmarks including the Acropolis and Parthenon, continues to attract tourist dollars and investment dollars alike. Athens ranked among the top 10 most attractive European cities for hotel investment in 2023, according to a CEOWorld survey, citing interest from both foreign investors and large hotel chains.

Berlin, Germany

Metro population: 3,574,000
(+0.3% since 2020)

Berlin’s office market has enjoyed year-on-year rental rate growth of around 6 percent at the beginning of 2023 while maintaining an overall vacancy rate of around 5 percent, according to data from global brokerages JLL and CBRE. The city remains a target for multifamily investing as real estate prices continue to increase sharply due to high demand and low supply.

Munich, Germany

Metro population: 1,576,000
(+2.5% since 2020)

Munich is the capital of Bavaria and also the capital of yield properties, according to local real estate firm Von Poll Commercial. In a recent blog post, the company highlighted the city’s sharp increase in real estate prices and multifamily rents in recent years compared to other cities, leading to attractive returns for commercial property investors.

Stockholm, Sweden

Metro population: 1,700,000
(+4.1% since 2020)

Stockholm has one of the fastest growing populations in Europe, which is putting more pressure on a housing market already pinched by rock-bottom interest rates and a shortage of available units. The city’s property market continues to impress, with prices increasing substantially over the past 25 years, according to European investment giant Patrizia.

Frankfurt, Germany

Metro population: 796,000
(+2.4% since 2020)

While overall transaction volume in Frankfurt is down on the year because of interest rate shocks and a pricing disconnect, demand for development land and office space remains strong. Research by global brokerage Cushman & Wakefield shows net initial yield for high-end office was 4.35 percent at the end of the third quarter and first-class logistics properties are trading at a 4.30 percent yield.

Milan, Italy

Metro population: 3,155,000
(+0.5% since 2020)

Milan has seen property transaction volume increase steadily each year since 2020, including more than €3.1 billion in domestic investment and nearly €8.7 billion in foreign investment in 2022 alone, according to European brokerage Arnold Investments. The hotel and industrial/logistics sectors saw prime yields over 5 percent in the second quarter of 2023.