Commercial Finance Specialists

London has fallen to second place below Moscow in the rankings of Europe's most attractive cities for real estate investment.

La Salle Investment Management's latest annual European Regional Economic Growth Index report sees London fall to second place in 2011 due to low performing economic and employment growth and global financial concerns. London still exceeds Moscow on the index for business environment, but has fallen below it on account of considerable growth potential differences.

Moscow has leapt from 10th place to the top in just two years after rising to second last year. Size and economic growth remain fundamental to investment potential.

London does continue to perform strongly in terms of commercial and real estate development. The author of the report, Alistair Seaton, described the impact of the slowdown on Europe's real estate economy in 2011, before addressing the significance of the report:

"The E-REGI provides guidance as to what can be expected of the European property markets, identifying the cities that look set to provide the best medium-term prospects for occupier demand. As Europe is recovering from a severe crisis and now faces new challenges, dynamic economies such as London and Paris, perform more strongly while less competitive locations, in otherwise robust countries, fall behind".

The UK continues to be the most polarized, the report shows. London is the only UK city ranked in the top 20, while all the other cities are mainly placed in the bottom half of the table.

Most UK cities did gain ground on their index placing in 2010. Regional competitiveness has gained increasing importance as cities struggle to rely on robust national economic growth to uphold their own performance.

Tess Nelson