IstanbulAP

Property investors are looking further afield to places like Istanbul, Warsaw and Moscow for bargains and better investment returns while London has lost some of its allure.

The UK capital has slipped down the list of Europe's property hotspots to languish at the bottom of the top ten, according to an annual report by PricewaterhouseCoopers and the Urban Land Institute.

Over half the cities in the survey recorded a lower investment score than last year, including major markets such as London and Frankfurt, as well as Copenhagen, Madrid and Rome, as the eurozone debt crisis takes its toll.

Although Istanbul tops the ranking for new investment prospects, its attractiveness to investors is perhaps more symbolic than real - more of a comment on its exciting economic growth prospects than a sign that capital is about to flood to that corner of the continent, the report said. As the interviews revealed, 2012 is about staying safe and not straying too far from what you know - especially if that involves a move to both unknown and high-risk markets.

Top 5 property hotspots for 2012

Top five property hotspots for 2012



Istanbul is followed by Munich, rated for its stability (it has one of the lowest unemployment rates in Germany) and Warsaw (which is styling itself as the main financial hub in central and eastern Europe). Berlin, Stockholm, Paris, Hamburg and Zurich are next, as investors look for safe havens. Moscow made it into the top ten for the first time, leaping to ninth place, while London came tenth - a steep fall from second place last year.

Berlin came top for residential investment in Europe. Its appeal, like that of Munich, is stability, and its popularity reflects a wider search for safety amid all the uncertainty caused by the financial crisis and economic downturn. Stockholm (and Sweden overall) have impressed investors with a strong performance throughout the financial downturn. It is considered one of the strongest markets in Europe, due to robust public sector finances and a solid export-driven economy.


While safe, London is seen as overpriced and its dominant financial sector makes it more vulnerable to upcoming banking regulation than Paris. Investors surveyed cited concerns over the difficulty of obtaining assets, strong competition and pricing on the brink of a bubble.

Investors believe investment will increase in just a quarter of the 27 markets surveyed this year - Berlin, Hamburg, Istanbul, London, Moscow, Munich and Stockholm - although capital values and rents are likely to stay the same for most of them. Cities such as Paris and Frankfurt will not see an increase. Investors from France, the Czech Republic and Portugal were the most pessimistic.

PwC's recommendations for short-term investment strategies include:
  • Buildings in need of refurbishment on the edges of prime districts in major cities;
  • Budget hotels, especially in London's Waterloo, Paddington, King's Cross or Bishopsgate areas (survey respondents recommended buying secondary office space and converting it to mainstream lodging);
  • Homes in London that could be resold to wealthy individuals from Greece and Italy seeking to own a home in a country that, while in a downturn, remains more economically stable than those two countries.

Metropolitan Area Investment Prospects for 2012
1. Istanbul
2. Munich
3. Warsaw
4. Berlin
5. Stockholm
6. Paris
7. Hamburg
8. Zurich
9. Moscow
10. London
11. Vienna
12. Helsinki
13. Frankfurt
14. Prague
15. Copenhagen
16. Lyon
17. Edinburgh
18. Milan
19. Amsterdam
20. Brussels
21. Madrid
22. Rome
23. Barcelona
24. Budapest
25. Lisbon
26. Dublin
27. Athens

Source: Emerging Trends in Real Estate Europe 2012 survey by PwC and Urban Land Institute