Moscow seen as Europe's most attractive city for future property investment

By bne IntelliNews November 7, 2011

bne -

The sovereign debt crisis is polarising Europe's property markets, with the most attractive cities for future real estate investment being the competitive economies of the Nordics, Germany and Emerging European markets like Russia, according to Jones LaSalle's annual European Regional Economic Growth Index (E-REGI).

"The polarisation in Europe is the strongest since before the adoption of the single euro currency," says Simon Marrison, European CEO of LaSalle Investment Management. "The competitive economies of the Nordics, Germany and emerging eastern European markets are forecasted to fare relatively well over the next few years, while the highly-indebted southern European and certain emerging markets are likely to lag."

London has slipped to second place in 2011 due to a reversal of last year's gains in GDP and employment growth, as well as renewed global financial concerns, which have indirectly impacted the UK's capital. However, the city's wealth and business environment scores still far exceed those of Moscow, which leads the E-REGI rankings on the basis of its growth potential.

After climbing from 10th to 2nd place in last year's E-REGI, Moscow tops the table this year, demonstrating the importance of size and economic growth to a city's investment potential. Even so, LaSalle believes that a negative business environment score will continue to deter some foreign businesses and investors. "The crucial issue going forward is to restore confidence amongst foreign investors still wary of investing in Russia," argues LaSalle. "Moscow's growth potential and size makes it stand apart from the other cities, but potential growth by itself is not enough to earmark a city as a potential investment target market. All Russian cities received a negative business environment score primarily due to the lack of transparency and uncertainties around how foreign businesses can operate effectively."

Turkey, whose GDP growth reached an annual rate of 11.0% in the first quarter of this year driven by production capacity gains and its unrivalled consumption, sits alongside Russia as a sizeable emerging economy, which is reflected in Istanbul's surge from 25th to 5th place in the E-REGI rankings. The city is quickly establishing itself as a regional financial centre, whilst the rest of the country is also seeing the benefits of exceptionally high growth. "Istanbul performed very strongly, supported by the government's vision to turn the city into a regional financial hub. Large stable state banks are in the process of relocating their headquarters from Ankara to Istanbul, with the Central Bank and regulatory institutions expected to follow," LaSalle says.

In the second quarter, direct commercial real estate investment in Europe totalled €25bn, representing a 6% fall on the first quarter but 4% year-on-year growth. The increase in investment volumes in Turkey and Russia demonstrates that some investors seeking higher returns remain deterred by pricing of prime assets and are therefore looking into alternative markets with more growth potential in preference to weak, secondary markets in established economies.

Related Articles

Drum rolls in the great disappearing act of Russia's banks

Jason Corcoran in Moscow - Russian banks are disappearing at the fastest rate ever as the country's deepening recession makes it easier for the central bank to expose money laundering, dodgy lending ... more

Kremlin: No evidence in Olympic doping allegations against Russia

bne IntelliNews - The Kremlin supported by national sports authorities has brushed aside "groundless" allegations of a mass doping scam involving Russian athletes after the World Anti-Doping Agency ... more

PROFILE: Day of reckoning comes for eccentric owner of Russian bank Uralsib

Jason Corcoran in Moscow - Revelations and mysticism may have been the stock-in-trade of Nikolai Tsvetkov’s management style, but ultimately they didn’t help him to hold on to his ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss