[en] Lisbon is moving up to the big leagues
Although German cities still retain solid positions in ULI’s top 10 list of most attractive European cities for 2019 — Berlin, Frankfurt, Hamburg, and Munich, ranked 2nd, 5th, 7th and 10th respectively — Lisbon has defied all odds with a spectacular 10-position jump to number 1 in this year’s choice for overall prospects.
As a general trend, investors are now shifting their attention to smaller and dynamic European cities. They are increasingly looking into Portugal, once lagging behind its fellow EU members, and now a booming economy. The country is enjoying its highest growth in nearly two decades, boosted by its strong tourism industry, a promising tech sector, and flourishing export trade.
Long regarded as a mere holiday destination and retirement haven, Lisbon is now moving up to the big leagues. The Portuguese capital’s attractiveness is mostly due to the wide range of opportunities it provides both for financing and promoting.
As a result, a large majority of European investors and developers praise its quality of life and positive leadership and perceive the city as a strong, late-cycle play.
In relation to some of the major European markets viewed as overpriced (London, Paris, Geneva, Monaco…) and believed to have reached their peaks, Lisbon’s real estate market remains relatively cheap and allows considerable room for further growth and outsized returns.
Well-known for its high quality of living, and research and innovation capacity, Berlin ranks number 2 and retains great popularity among investors who continue to consider the German capital as a very safe bet: “Everybody wants to be there, and rents are going through the roof,” says a pan-European investor. As Brexit looms, Frankfurt is tipped as one of the main beneficiaries (like Paris and Dublin) and as a result, commercial real estate is booming in the state capital of Hessen. Munich has dropped from 6th to 10th most attractive city in Europe. That being said, the Bavarian capital remains a “solid” and favorite market for many real estate owners. « Berlin, Hamburg, Frankfurt, and Munich are all great cities, but at the moment they are absolutely overpriced. It is almost impossible for us to find interesting opportunities, » says a pan-European fund manager in ULI’s Emerging Trends 2019 Survey
With the Finnish economy, traditionally one of the best-performing in the EU, growing at a robust pace, Helsinki has made it into the top 10, jumping 10 positions from last year’s ranking to make it to number 8. Viewed as another late-cycle play, Finland’s capital city is becoming an increasingly important player and continues to attract both domestic and foreign investors.
Three other cities — Dublin, Madrid, and Amsterdam — retain their positions in this year’s top 10. Those cities offer countless advantages when it comes to quality of life, connectivity, high innovative potential or talent attraction /retention. However, on the other side of the coin, their markets are shrinking, putting upward pressure on rents.
Against this backdrop, other cities are gaining popularity among international investors. While London, Geneva, Paris and Monaco prices are still sky-rocketing, southern cities like Athens, Heraklion or Malta offer great opportunities and good return prospects.
