Prospects Remain Strong For European Cities: Savills

Savills have released the latest research focussing on the people and organisations who live and work in European cities.

Twelve European cities were selected for detailed examination in European Cities 2017, including London, Paris, Frankfurt and Warsaw.

Savills Director of World Research Yolande Barnes said European cities have many of the characteristics of highly successful world cities that make them very attractive to workers looking for ‘urban buzz’ and a high quality city lifestyle.

"Their authentic environments, varied cultural experience and high quality of living makes the European cities in this study attractive not only to employees but also to employers."According to the report, Europe's city economies were divided into three groups - 'global powerhouses', 'urban accelerators' and 'contenders'.

"London, Moscow, Paris and Madrid produce high levels of economic output, measured by gross value added (GVA), ranging from €193 billion to €428 billion," Ms Barnes said, labelling these cities as the powerhouses.

She said Milan, Stockholm, Dublin and Berlin were the ‘Urban Accelerators’, producing GVAs of between €103 billion and €139 billion.

The report said the expense ranking is likely to change in some cities, due to a forecasted rise in workspace rents over the next year in Amsterdam, Dublin, Paris, Madrid, Milan and Stockholm.

"They are broadly stable in Brussels, Frankfurt, London and Warsaw, giving occupiers more certainty on real estate costs."
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"Where real estate costs are scrutinised, it is becoming as important to look at residential affordability as well as commercial property costs," Ms Barnes said.

"Young creative workers are increasingly attracted to good, small cities offering cheaper accommodation as they are priced out of the big global financial centres.

"This is part of the reason why some very small European cities like Berlin, Dublin and Amsterdam are hugely successful and punching above their weight economically. Their worldwide fame belies their size."Taking a combination of measures into account, the report said London still stood out as the most attractive European city for the finance sector, despite Brexit raising questions on London’s future as a financial centre"The evidence ... suggests that no single city will take London’s crown but rather the EU passporting functions of many institutions will be dispersed throughout Europe to a variety of cities for different reasons," Ms Barnes said.

Overall, there are reportedly good reasons to expect further growth in both the economies and real estate markets of many European cities.

"The strength of occupier markets should continue to attract global investment in many European cities and to start attracting it in others," Ms Barnes said.

"The attractiveness of these cities to investors is important for occupiers in the long run as it will determine whether they can find sufficient workspace of the right type in the right place and whether housing is affordable for their key workers."Ms Barns said the economic and demographic strength of most of the European cities is such that both occupier and investor demand should be assured.