Parisian office real estate market ranks second most dynamic in Europe

A yearly ranking of office property markets in 100 European cities puts Paris in second place behind London, in keeping with results for 2014. Eight other French cities also make the cut.

Published last month, the results are part of an annual research report undertaken by investment management company LaSalle. The E-REGI (European Regional Economic Growth Index) aims to identify the cities with the highest investment potential and is aimed at office property investors looking to place capital in Europe.

The 16^th edition of the E-REGI reports that the city of Paris has seen its gross domestic product increase recently, and the Île-de-France region “generates about a third of the national wealth and is home to the highest concentration of large firms in continental Europe” according to Mahdi Mokrane, head of European research and strategy at LaSalle.

Indeed, 29 of the large companies ranked in the Fortune 500 have their headquarters in Paris or Île-de-France, while London only houses 19 of them. The French capital’s research and development expenditure is greater than that of entire countries such as Russia, Spain and Sweden, mostly thanks to the presence of innovative companies and public research centers on its soil, such as the French National Center for Scientific Research (CNRS).

Two other French cities have fared fairly well in the ranking. Lyon achieved the 24^th place and Toulouse — the European leader in space and aviation activities — placed 29^th.

Bordeaux, which arrived in 55^th place is set to progress in light of the high speed train line which will link it to Paris in just over two hours in 2017, according to the investment management firm. Nantes is also expected to benefit from its own new train line in coming years. Other French cities in the ranking include Marseille and Strasbourg.

Following behind London and Paris in the ranking are Istanbul, Stockholm, Luxembourg, Oslo and Munich.

For the first time this year LaSalle has come up with four distinct categories in which to place the cities in its ranking, in order to help investors develop strategies adapted to each market. The “constants” — which include Paris and London — are cities which combine strong capital with promising long term prospects. “Successful” cities include Stockholm and Oslo and refer to markets more difficult to penetrate because of their small size and competition from local investors. The third category pertains to “changing” cities such as Berlin and Toulouse where timing is key to invest in their cyclical markets. Finally “promising” cities — like Prague and Warsaw — are seen by LaSalle to have benefitted from their entry into the European Union, with their markets today faring almost as well as their Western European counterparts.

“With 800 million inhabitants, Europe is a dense region in which investors must now think in terms of cities rather than countries,” concludes Mokrane in the study, explaining why the format of LaSalle’s report is helpful to international actors devising an investment strategy in Europe.

Photo credit: Wikimedia Commons / Ros K