Cities of Influence Score vs Investment Volumes (Top 30)


Mega 150 London Investment Outlook 130 Paris


CITY Berlin


Frankfurt-aM Copenhagen Munich Madrid


Hamburg Dublin


Stockholm Amsterdam Barcelona Lisbon Vienna Paris


Prague Oslo


Milan Helsinki Budapest


Manchester Birmingham Lyon


Warsaw Zurich


Brussels Edinburgh London Rome


Athens Moscow


Source: ULI


2018 ULI INVESTMENT DESTINATION RANK


1 2 2 4 5 6 7 8


10 11 11 13 14 15 16 17 18 19 20 21 21 23 24 25 26 27 28 29 30


OCCUPIER VS INVESTOR


Given that the European market is at the top of the current investment cycle, occupier drivers are increasingly important in maintaining and growing capital values long-term. With limited scope for further yield compression in light of impending inflation and rising interest rates, buying into markets with a strong occupational basis, and/ or a strong growth story should be increasingly important to investors. So how does Colliers CoI analysis match with where investors have been investing in 2017, and where investors - at least courtesy of the recent ULI Emerging Trends report - think investment capital should be going in 2018.


TOP THREE CORRELATION


If we compare our CoI index to the key investment capital destinations of 2017, there is a clear correlation with the top three markets i.e. the top three CoI markets of London, Paris and Madrid were also the top investment destinations of 2017 and in that order (see matrix chart above).


There are other instances where the correlation matches, or is at least very close including: Munich, Manchester, Stockholm, Vienna, Cologne, Copenhagen,


Colliers International | Cities of Influence | Q1 2018 | EMEA 110 Moscow


LeedsFrankfurt-aM Berlin


Edinburgh Bristol


Lisbon 90 Stuttgart Glasgow Lyon


Copenhagen Rome


Dublin Prague


Manchester Stockholm


Barcelona Utrecht Amsterdam Helsinki Hamburg


03 30 € Billions


Investment Volumes 2017 Source: Colliers International, RCA, Various


Utrecht, Rome, Barcelona and Prague. This suggests that investors are buying into markets with the best current, and in many respects long-term, drivers of occupational growth. For the larger markets, scale also generates liquidity.


Yet there are many markets where the correlation weakens, but it is possible to understand and give a view as to why. Moscow, for example features as No. 4 in our CoI index, but ranked 19th as a capital destination in 2017. Few explanations are needed as to why it is currently not the top 4 European location to invest, but it is worth remembering that prior to the market changing events of 2013 it ranked 3rd as a capital destination in 2011, and 5th in 2012.


Other ‘non-correlations’ include many of the UK regional cities, which - Manchester aside - appear under-invested. Helsinki reaching 7th place as capital destination for 2017, courtesy of Blackstone buying Sponda, is another example of how activity and events will always skew where investment capital goes.


Looking forward, although pricing and returns, access to product, new infrastructure and development will always be key factors in attracting investment, the ‘occupier drivers’ highlighted by our CoI index should take on more importance in determining capital flows in the years ahead.


As for 2018, it is hard to discount the magnetism of London and Paris at the top of the leaderboard, even though the latest ULI emerging trends survey gives Germany, the Benelux and Nordic markets a front-seat. Berlin is very likely to press Madrid for 3rd place, and many of the UK regional cities look ‘under-invested’ relative to their CoI score, which could drive a shift in capital distribution. Perhaps the main observation, as per the matrix above, is that that Europe will continue to be a tightly contested landscape as cities vie for talent, business growth and investment. The good news is that this will create new opportunities, extending the investment cycle further. There is plenty to play for.


12 Cologne Vienna Zurich


Birmingham Milan


Munich Madrid Large Mid-Size Small


CoI Total Score (Max 200)


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