European Commercial Property Investments Name Cities with Highest Standard of Living

04. February 2016

The commercial property market in Europe grew in 2015 and forecasts for 2016 remain positive. In particular, a significant number of occupational transactions are currently taking place. The most interesting cities for investment are also those with the highest quality of living.

Real Estate Investment Increased in 2015

A total of € 50.7 billion was invested in European commercial property in the third quarter of 2015, showing a 14% increase compared with Q3 2014. In spite of the fact that the positive trend slowed down when compared with the first two quarters, the European property market is gaining traction, say Knight Frank experts in the European Quarterly Commercial Property Outlook: Q3 2015. Eurozone GDP is expected to increase by 1.6% in 2016.

Germany as Largest Real Estate Market

Germany proved to be the strongest European market in Q3 2015, with a commercial investment of € 12 billion, a 76% increase over Q3 2014. The Knight Frank report refers to HBS acquisition of several Galeria Kaufhof department stores in a deal valued at more than €2.6 billion as the most significant transaction – a deal supported by Drooms Data Room.

Office Take-up Market Accelerates

Rental prices are stabilizing in Europe, inspiring confidence in corporate tenants willing to make big occupational decisions. With occupier market the field increasingly gaining momentum, office take-up raised by 11% year-on-year over the first three quarters of 2015. Office space is in high demand; however, rental growth has remained moderate across Europe. During Q3, prime office rental cost increased in Dublin, Lisbon, London (City), Madrid and Stockholm, but remained stable in other major European markets. Knight Frank’s European Prime Office Rental Index rose by 1.1% over the quarter.

Europe Offers the Best Standard of Living

Indeed, Europe offers many attractive locations for businesses settling their offices, as governments introduce good incentives for foreign investors. Many of the cities represented in the graphic above appear to offer the highest quality of living and working, at least according to Mercer’s 2015 Quality of Living rankings: Vienna (1) is followed by Zurich (2), Munich (4) and Frankfurt (7). Other highly rated cities are Dublin, Barcelona, Amsterdam, Bucharest, Berlin and Paris. Similar rankings are all over internet, each considering different definitions of quality of living (e.g. 244 million Google results for the entry “Europe's best cities to live in 2016”). Europe attracts not only investors but also a cosmopolitan workforce wanting to relocate.